Unlike companies, when an individual becomes insolvent, their insolvent estate is usually resolved through bankruptcy.  An insolvent person may declare themselves bankrupt, otherwise, a creditor may apply to Court for an order declaring a person bankrupt due to unpaid debt.  Accordingly, we are appointed Trustee in Bankruptcy either by the Court or by the Insolvent individual nominating us.

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The role of the Trustee is similar to that of a Liquidator of a Company in that the Trustee realizes available assets for the benefit of the Bankrupt’s creditors.

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However, the Bankruptcy Act allows the individual to retain certain personal assets (such as essential household furniture and effects, a motor vehicle to a certain value, and tools of the trade), as well as earn an income to a certain level before contributions must be paid to the Trustee.

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The proceeds from the realization of assets and income contributions are distributed by the Trustee to the Bankrupt’s creditors.

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A person remains bankrupt for 3 years and is prohibited from doing certain things during this time including obtaining credit and managing a business or company.  If the Bankrupt does not comply with his/her obligations, then the bankruptcy can be extended beyond the minimum 3 year period.