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.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy