Presented by Jones Partners

Bankruptcy is often considered as little more than the legal-administrative process that occurs after a person becomes unable to pay their debts. This is a highly reductive way of describing a complex human experience that can be both deeply challenging and liberating for affected individuals.

In Australia, a bankrupt estate vests with a trustee for three years, during which the appointee has a wide range of powers to exercise. This loss of agency for the individual can be highly distressing, requiring appointed trustees to have more than just a technical skillset, but also vast interpersonal and communication skills.

Financial distress and psychological distress are also closely linked. It is therefore unsurprising that bankruptcy, an event considered by many as the ultimate financial hardship, can jeopardise the wellbeing of affected individuals. It can be a trepidatious experience, to relive the period leading up to bankruptcy (as is required at commencement), as can confrontations with creditors.

Bankruptcies often occur in tandem with other kinds of challenges. Alcohol abuse, gambling, and relationship issues can manifest alongside financial difficulty, which require additional sensitivity from an appointed trustee. It is not uncommon for insolvency proceedings to end up in the Family Court.

When interacting with vulnerable individuals, there are several ways Jones Partners trustees tactfully engage with a bankrupt. Firstly, open lines of communication using plain English are extremely important. Financial jargon and over-complication of issues will only confuse (and ultimately frustrate) the bankrupt. It is crucial to communicate clearly and empathetically.

Negotiating with a bankrupt can also present many challenges. The forceful vacation of property can be a distressing experience, and bankrupts often experience denial, choosing to “bury their head in the sand” rather than face what is occurring. When dealing with particularly vulnerable bankrupts, it can often be worth discussing with creditors avenues for temporary accommodation after home possession, as an incentive for evacuating premises. Removing the immediate stress of homelessness can significantly increase the cooperation of affected individuals, decreasing delay and expense.

Bankruptcy is more than an inability to pay one’s debts. It is a challenging experience that requires careful consideration from trustees for a bankrupt’s unique circumstances. At Jones Partners, we understand this, and strive to uphold the interests of both our creditors and the affected individual in all matters.

For further reading on bankruptcy see the following

Personal Bankruptcy…It’s Time to Break the Historical Taboo