Are you currently looking at a Bankruptcy Notice that is demanding payment from a creditor or a group of creditors. You may be wondering what to do next. LegalVision may be able to help.

Purpose of Bankruptcy Notice

Remember that the purpose of a bankruptcy notice is to create a presumption that you are bankrupt and therefore the court focuses on the bankruptcy procedure, and is therefore not interested in whether you actually owed the creditor money for this purpose. When you have been served with a bankruptcy notice, it is not at this stage that you can oppose the actual debt on the notice.

The main focus here for challenging the bankruptcy notice is on a procedural level. For example, if it was not adequately served on you. This process of setting aside the bankruptcy notice is only in relation to whether the bankruptcy notice is going to lead to a presumption of bankruptcy.

Setting aside the Bankruptcy Notice

To ‘set aside’ the Bankruptcy Notice essentially means to dissolve the legal effect of the notice. You will need to bring an application within 21 days that you either:

  • have to pay; or
  • have settled your debts.

In that manner, you can allege that the Bankruptcy Notice is defective or irregular. The court must conclude that there is substantial injustice that has caused the defect or irregularity and that the injustice cannot be remedied by an order of the court. For instance, the creditor gave you 18 days to pay instead of the minimum 21 days. The court may then decide to extend the 18 days for a further period so you will receive the total 21 days.


To better explain challenging a Bankruptcy Notice, let us look at a scenario.

Bob served a bankruptcy notice on Sarah but it understated the amount of the interest due on the debt. You may be thinking, ‘That’s good for Sarah – she can pay a lesser amount than she actually owed.’ Realistically, yes. But if Sarah decided to challenge the notice, arguing that the notice was not valid because it understated the amount she owed, the court will ask:

  1. Was the notice defective or irregular?
  2. If so, is the defect or irregularity substantive or formal?
  3. If the defect is formal only, is it substantial and not able to be remedied by the court?

Here, the ‘defect’ could easily be changed to the correct amount owed and therefore it was not substantive or formal. Sarah would lose and she would have to pay the amount owed to Bob. Sarah would only succeed in challenging the bankruptcy notice if the understatement of the amount she owed was able to mislead her in relation to what she had to do next.


As you can see, challenging a Bankruptcy Notice can be complex and a painstaking task. Therefore, before deciding whether you should challenge the notice, you should seek legal advice so as to ensure you have a valid claim. If you require assistance, LegalVision is delighted to help your legal needs.

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