A bankruptcy record means the applicant was previously unable to pay their debts and they are now legally bankrupt. When this occurs, an order is generally put in place to have a certain amount of money deducted from the individual’s wages until a portion of the debt has been repaid. If a tenant has a current bankruptcy order and goes into rent arrears, you may not be able to claim back the debt.
The two main types of bankruptcies you may encounter are sequestration orders (the creditor has had the individual declared bank by the courts) or debtor’s petitions (the individual had voluntarily lodged for bankruptcy).
A Sequestration order is the most common form of bankruptcy and is generally more severe than a debtor’s petition.
You might also encounter a ‘Debt Agreement (Part 9)’ – a form of bankruptcy where a creditor will agree to accept a lower sum of money that the debtor can afford to repay.
These are usually less severe forms of bankruptcy for debtors owing between $5,000 and $20,000. These individuals will still have money deducted from their wages to repay their debt.
The discharge status is the most important section for you to look at to help make an informed decision, the main status types you will see are:
Discharged: The bankruptcy has been cleared and the applicant is no longer paying off their debt
Not discharged: The bankruptcy is still current and the applicant is paying back the debt from their wages
Settled: The applicant has agreed to settle for a lower amount which has been paid off