Bankruptcy and its consequences

Bankruptcy is a legal status that can be imposed on an individual who is unable to repay their debts. It is a process that provides relief to insolvent debtors by allowing them to seek protection from their creditors and potentially have their debts discharged. There are two ways in which a person can become bankrupt:

1. Involuntary Bankruptcy commonly known as Creditors Petition: This occurs when a creditor applies to the court for a sequestration order, which results in the debtor being declared bankrupt against their will. The creditor has the right to force bankruptcy upon the debtor if a debt of at least $10,000 remains unpaid.
2. Voluntary Bankruptcy also known as Debtors Petition: The debtor can choose to voluntarily go bankrupt by presenting a debtor's petition to the Official Receiver. If there is no pending application by a creditor to bankrupt the debtor, the petition is accepted, and the person becomes bankrupt. This allows insolvent debtors to seek the