Glossary

A B C D E F G H I J K L M N O P Q R S T UVW XYZ

A
Act of bankruptcy - an action or declaration which, if not carried through, can be used by a creditor to apply to the Court to make a person bankrupt.
Administrator - an eligible person nominated by a debtor to handle a Debt Agreement on their behalf.
Antecedent Transaction - a transaction that has taken place prior to a Personal Insolvency Agreement or bankruptcy. They include transactions where less than market price has been paid for an asset in consideration of a transfer in ownership or a transfer has been made to defeat the right of access by creditors or preferential payments are made to a specific creditor. A trustee has the ability to recover the asset or difference in purchase price paid.
Asset - anything a person owns before going bankrupt, or buys or receives during bankruptcy. Assets can be divided into two types - Divisible Assets and Exempt Assets.

B
Bankruptcy Notice - a formal, final demand for payment of a debt by a creditor owed at least $2,000 on one or more final judgments or final orders. This notice is issued by ITSA through the Official Receiver. Failure to pay within 21 days is an act of bankruptcy.
Bankruptcy Act 1966 - the Commonwealth legislation which covers bankruptcy, Part IX (Debt Agreements), and Part X arrangements. It deals with individuals not corporate entities which is covered by the Corporations Law administered by the Australian Securities and Investment Commission.
Bankruptcy - a process where people, who cannot pay their debts become bankrupt to receive the protection of the Bankruptcy Act and their estate is administered by a trustee. It allows for the fair distribution of property among creditors and the prosecution of dishonest debtors.
Bankruptcy Offence - an act by a person under the Bankruptcy Act that can lead to a person being prosecuted, fined, imprisoned, or made to make restitution.
Benefit - a bankrupt may derive a benefit from a number of sources. It could be a loan or a fringe benefit or monies paid to a third person as a result of exertion by a bankrupt. These types of benefits can be included as a part of a bankrupts contribution assessment to determine what contribution must be paid from a bankrupt's income.

C
Creditor's Petition - is a means by which a creditor makes an application to the Court to make a debtor bankrupt
Controlling Trustee - is a person who is a private bankruptcy trustee, ITSA or an eligible solicitor who investigates a debtor's financial affairs and calls a meeting of the debtor's creditors under Part X of the Bankruptcy Act.
Contribution - a sum of money that a bankrupt person is required to regularly pay to their trustee from their income. It is normally called a compulsory contribution and is based on a statute based formula.
Composition - is one of the options that a debtor offered to their creditors under Part X of the Bankruptcy Act to resolve their financial difficulties pre 1/12/04.
Court - in the context of bankruptcy, the Court usually refers to the Federal Court of Australia or the Federal Magistrates Service. Both of these Courts can hear matters associated with personal insolvency
Current Amounts - these are amounts that are periodically adjusted in accordance with the Consumer Price Index. Some are adjusted every quarter, others every six months. As an example they identify the value of assets that can be retained by a bankrupt or the income a bankrupt can retain before they are required by law to contribute towards their bankruptcy.

top

D
Debt Agreement - an arrangement between people who cannot pay their debts. It is a formal arrangement under Part IX of the Bankruptcy Act.
Debtor - a debtor is a person who owes money to a creditor
Debtor's Petition- an application made to ITSA to become a bankrupt. The form to use is Form 6
Divisible Assets - assets/property which can legally be sold in bankruptcy by the trustee.
Discharge - the end of bankruptcy. The date of discharge is the day after bankruptcy ends. The statutory period of bankruptcy is three years and one day from when a person files their Statement of Affairs at ITSA through the Official Receiver.
Dividend - this is a distribution that is made to creditors from any asset or income realisations in an administration under the Bankruptcy Act.

E
Effective - a s188 authority that has been signed by both the debtor and the controlling trustee to enable a meeting of the debtor's creditors to be called to consider a Personal Insolvency Agreement. The authority does not become effective until both parties have signed.
Examinable Affairs - in relation to a person means the person's dealings, transactions, property and affairs and the financial affairs of an associated entity of the person in so far as they are or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs.
Exempt Assets - assets/property which cannot be sold in bankruptcy by the trustee. These are identified in s116 of the Bankruptcy Act.
Extension of Bankruptcy - If a bankrupt fails to co-operate with their trustee, or fails to meet the requirements of the Bankruptcy Act, their bankruptcy can be extended to a 5 or 8 year period from the date they file their Statement of Affairs with ITSA through the Official Receiver. In certain circumstances, the period of bankruptcy does not commence until a bankrupt returns to Australia.

F
Factsheets - ITSA has a number of information Fact sheets available on specific issues in insolvency.
Fringe Benefit - is a benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986.

G
Garnishee - this is an automatic deduction arranged without a person's consent from their income or bank account due to non payment of a debt. A trustee in bankruptcy can garnishee income or monies held by third parties on behalf of a bankrupt, where the bankrupt has been assessed as liable to pay a sum of money from their income in their bankruptcy and fail to make payments.

H
Household Property - items that a bankrupt is able to retain when they become a bankrupt. A list of items can be found in Bankruptcy Regulation 6.03.

I
Insolvent - a person is considered to be insolvent when they are unable to pay their debts as and when they fall due.
ITSA - Insolvency and Trustee Service, Australia. It is the Commonwealth Government agency that becomes the trustee when a private bankruptcy trustee is not appointed in a bankruptcy or other arrangement under the Bankruptcy Act.
IPAA - Insolvency Practitioners Association of Australia
Indexable amounts - these are the same as current amounts

top

J

K

L

M

N
NPII - National Personal Insolvency Index. It is a computerised data base of all personal insolvencies in Australia, both past and present.

O
Objection - the period of bankruptcy can be extended by a trustee. When this happens, the trustee lodges an Objection with the Official Receiver at ITSA. Once it is registered on the National Personal Insolvency System, it is an valid objection. A trustee can lodge an objection If a bankrupt fails to co-operate, or fails to meet the requirements of the Bankruptcy Act. In this instance, a bankruptcy can be extended to a 5 or 8 year period from the date the bankrupt files their Statement of Affairs with ITSA through the Official Receiver. In certain circumstances, the period of bankruptcy does not commence until a bankrupt returns to Australia.
Official Receiver - is a person who administers statutory functions under the Bankruptcy Act for the government/ITSA. The functions performed are different to a trustee.
Official Trustee in Bankruptcy - is the government equivalent of a registered trustee. This role is performed by employees at ITSA.
Ordinary Resolution - a resolution passed by a majority in value of the creditors present personally, by telephone, by attorney or by proxy at a meeting of creditors and voting on the resolution.

P
Part IX - this is commonly known as a Debt Agreement. It is a flexible formal agreement entered into with creditors under the Bankruptcy Act.
Part X - this is a formal arrangement under the Bankruptcy Act. There are three different arrangements that a debtor can enter into with creditors this way. A Deed of Assignment, a Deed of Arrangement and a Composition.
Personal Insolvency Agreement (PIA) - this is a formal arrangement under the Bankruptcy Act between a debtor and their creditors for finalising their debts. PIA's came into effect on 1/12/04.
PINS - Personal Insolvency National Standards - standards developed between the Insolvency and Trustee Service, Australia and the Insolvency Practitioners Association of Australia
Prescribed information - this is information that MUST be read by a debtor before making an application for bankruptcy or submitting a proposal to ITSA for a debt agreement under the Bankruptcy Act.
Private Bankruptcy Trustee - a person who is registered with ITSA to be a trustee of bankruptcies and Part X arrangements. A private bankruptcy trustee can also be a debt agreement administrator. Sometimes a private bankruptcy trustee is known as a registered trustee.
Preference - this arises where a bankrupt pre bankruptcy has paid one or more creditors money or transferred an asset to them in priority to other creditors. A trustee can claw back this transaction once they establish 5 criteria to enable all creditors to share.
Protected Monies - monies that cannot be claimed by a trustee eg personal compensation money paid or payable for an injury, certain government grants.
Provable Debt - this is an amount that a creditor is entitled to claim for in a bankruptcy to participate in any distribution that may arise by way of a dividend.
Public Record - the data base known as the National Personal Insolvency Index houses information that is available to the public for a fee. The paper record or file maintained by ITSA on behalf of the Official Receiver is also maintained as a public record that can be searched for a fee.

top

Q

R
Registered Trustee - A person who is registered with ITSA to be a trustee of bankruptcies and Part X arrangements.
Released from debt - at the date of discharge a bankrupt is released from most debts. This means the bankrupt is no longer responsible for or have to pay those debts. A debtor subject to a Part X agreement is also released from their debts when they meet certain conditions within their agreement with creditors.
Resolution - a resolution passed by a majority in value of the creditors present personally, by telephone, by attorney or by proxy at a meeting of creditors and voting on the resolution.

S
Salary Sacrifice - for the purposes of assessing the amount a bankrupt will be required by law to contribute towards their bankruptcy, salary sacrifice arrangements with an employer are taken into account. This could be schools fees paid by an employer or additional superannuation paid instead of salary.
Sequestration Order - an order made before a Registrar of the Federal Court, a Federal Magistrate or a Judge in the Federal Court making a person bankrupt based on a Creditor's Petition or other application as outlined under the Bankruptcy Act.
Special Resolution - a resolution passed by a majority in number and at least three-fourths in value of the creditors present personally, by telephone, by attorney or by proxy at a meeting of creditors and voting on the resolution.

T
Trustee - this is a person who administers a bankruptcy or Part X administration. It is either a private bankruptcy trustee or ITSA as the Official Trustee in Bankruptcy.

UVW
Undervalued Transaction - is a transaction where less than market price has been paid for an asset in consideration of a transfer in ownership or the asset. A trustee has the ability to recover the asset or difference in purchase price paid.
Working Day - for a first meeting of creditors to consider a Personal Insolvency Agreement it is any day other than a Saturday, Sunday or public holiday.

XYZ

top

Page Last Updated: 11/06/2009
Contacts | Enquiry/Feedback/Complaint | Privacy Policy | Disclaimer & Copyright

spacing image

Senate Orders: Government Contracts (13/08/2010)    |    File Lists: Senate Continuing Order (20/08/2010)