The When a debtor who cannot pay their debts has their money and property taken over and managed by a trustee who uses it to pay back creditors. The debtor is then called a bankrupt. A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. creates criminal offences that can arise from the behaviour of the bankrupt before and during bankruptcy. In some cases this behaviour would not have been considered an A criminal act prohibited by state or commonwealth criminal law. An offence is either a summary offence (minor) or an indictable offence (serious). if the A person who owes a debt. had not bankrupted (e.g. gambling). The party presenting evidence in court on behalf of the state or Commonwealth government against a person accused of committing a crime. Also called the Crown. for bankruptcy offences can lead to a fine or a prison sentence.
The Bankruptcy Act defines a number of offences – generally relating to acts of An intentionally dishonest act, or lack of action, done to deceive someone and bring some advantage over those who have been deceived. or recklessness – that have led up to the bankruptcy or that are committed during the bankruptcy.
Types of offences
Offences under the Bankruptcy Act include:
- materially contributing to, or increasing the extent of, insolvency by gambling or rash and hazardous speculation (s 271);
- obtaining, after the date of bankruptcy, A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now. of $5969 (as at April 2021, indexed) or more without Providing information to another person or institution as required by a contract or other legal process. of the bankruptcy (ss 269(1)(a), (aa), (ab), (ac), (ad), 304A(1)(j));
- leaving Australia with intent to defeat creditors, or without obtaining a An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate. order where required;
- incurring, within two years before the date of bankruptcy, a Money that is owed by one person or business to another. without any reasonable expectation of repayment (s 265(8));
- obtaining credit or property by fraud after bankruptcy;
- failing to disclose to a trustee particulars of any disposition of property made in the two years before the date of bankruptcy;
- disposing of property before bankruptcy with intent to defraud creditors;
- disposing of property after bankruptcy;
- concealing property intending to defraud creditors;
- failing to deliver property divisible among creditors;
- failing to attend before the Official Receiver (AFSA) when requested;
- obstructing a person with intent to defeat the seizure of property;
- failing to deliver up books of account and other records;
- failing to comply with a supervised account notice; and
- failing to deposit income into a supervised account.
A debtor who has committed an act that is an offence under the Bankruptcy Act and who is considering bankruptcy should check both the maximum penalty for the offence and the probable penalty.
Details of prior prosecutions
AFSA’s annual reports contain details of prior prosecutions and the penalties imposed.
Whether a bankrupt is prosecuted for an offence, and the type of penalty imposed, depends on a variety of factors including the seriousness of the offence and the extent of the bankrupt’s indebtedness.
A debtor need not reject the option of bankruptcy because a potential offence has been committed. Even if convicted, it might be worth paying the penalty in order to be released from the demands of creditors.