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NSW Creditor Goes Bankrupt - What Happens to Debt?

Discussion in 'Debt and Bankruptcy Law Forum' started by TebetMonkey, 3 December 2015.

  1. TebetMonkey

    TebetMonkey Member

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    I would like to pose a scenario.

    Let's say J owes T money. T goes through a legal process and eventually bankrupts J for $10,000 owing. T then himself goes bankrupt. J is a bit tardy and his trustee has his bankruptcy extended by 5 years through an objection. T exits bankruptcy after 3 years and 1 day. J has made no contributions or entered into any agreement during T's bankruptcy.

    Does J still owe T $10,000 or his estate $10,000 after T is discharged? Does a debt to a creditor survive a creditors bankruptcy once the creditor has been discharged?
     
  2. Sophea

    Sophea Well-Known Member

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    Hi TebetMonkey,

    If you go bankrupt, most of your debts are permanently discharged and the creditor cannot pursue you for them after the bankruptcy. However, there are certain debts which fall outside the bankruptcy and which you will remain liable for after discharge from bankruptcy. Here is a table listing them.

    Debt comparison table — Australian Financial Security Authority
     
  3. TebetMonkey

    TebetMonkey Member

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    Hi Sophea,

    Thank you for your response. My question was J is still not discharged. T as the petitioning creditor has now gone bankrupt and has also been discharged. Does the bankruptcy of T and her discharge remove T as a creditor of J? J would like to make an offer of composition and she wants to know if she should include T in the creditor list.
     

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