You can be bankrupt for 14 years, or even forever!
The Bankruptcy Act 1966 prescribes that, in the event of a sequestration order being made (making a person bankrupt), the bankrupt has 14 days to file a Statement of Affairs with the Official Receiver. The Bankruptcy Act also prescribes that the three-year bankruptcy period does not commence until the Statement of Affairs is filed.
Often, in the bankruptcies that Worrells administer, it takes more than 14 days for the bankrupt to file their Statement of Affairs. This may be because we have difficulty in locating the bankrupt to advise them of their bankruptcy and the requirement to file their Statement of Affairs, or simply because it takes them some time to complete the Statement of Affairs with all its requirements. Therefore, it is not unusual for a bankruptcy to run for say three years and two weeks, or three years and two months.
However, it is quite unusual to see this process delayed over a decade…
In one of our bankruptcies, the sequestration order was made on 6 December 2005. The bankrupt filed his Statement of Affairs on 11 July 2017. Yes, you are reading this correctly. He went bankrupt in 2005 and has only now filed his Statement of Affairs. Consequently, after been made bankrupt on 6 December 2005 he is now due for discharge on 11 July 2020. That’s 14 and a half years later!
Putting aside the obviously significant delay in being discharged from bankruptcy and starting afresh, it also means that his affairs (including income) have been the subject of monitoring for an extra 11 and a half years, during which time he could have inherited money or even had a lotto win.
It is often said that bankruptcy is not punitive. It is not there to penalise an individual for financial insolvency, but rather to allow a fresh start and for creditors to get compensation. However, in this particular case the bankrupt has made it a penalty upon himself by not filing his Statement of Affairs and not allowing the fresh start afforded to him by the bankruptcy process.
Moral of the story: file the Statement of Affairs. Don’t turn three years into anything more than necessary. That way everyone can move on.