Methods of discharge other than the 1 year automatic discharge period
Anyone who is made a bankrupt remains a bankrupt for 1 year, unless he is discharged from bankruptcy by High Court order before then, having settled his debts with his creditors. Where a bankrupt is discharged on foot of a Court order having settled his debts with his creditors (see below), he will have any unrealised assets re-vested in him by the order of Court discharging him from bankruptcy.
There are a number of methods which could enable a bankruptcy to be discharged by Court order before the 1 year period of bankruptcy ends. However with these alternative discharge options listed below, there must be sufficient funds to pay:
- High Court fees
- Costs of the Official Assignee,
- The costs of the petitioning creditor (where applicable),
- The preferential debts of the bankrupt person.
- Discharge after payment of debts in full
This is where the bankrupt person's creditors are paid in full. If the High Court so allows, interest may also be payable. Normally, interest is only paid where surplus funds are available.
- Discharge with the creditors' consent
This is where all of the bankrupt person's unsecured creditors consent to the discharge.
- Discharge after making composition with the creditors
This is where unsecured creditors agree to accept payment of a certain percentage of their debt in settlement of the full amount. This must be supported by at least sixty per cent in number and value of those creditors who vote at a sitting of the High Court for this to be accepted. The bankrupt person must provide the Official Assignee with sufficient funds to make this settlement and pay his unsecured creditors. This is called an Offer of Composition.