Normally, bankruptcy of an individual lasts for 3 years and 1 day, after which the person is said to be “discharged” from bankruptcy, and all the rights that the individual had prior to being bankrupt, are reinstated. But there are cases, in which the bankruptcy of the individual can be cancelled, also known as “Bankruptcy Annulment”. A bankruptcy can be cancelled in 3 ways:
- Paying off All Debts and Charges
In case you have repaid all your debts during the term of your bankruptcy, because your trustee has realised sufficient funds by auctioning or selling off your assets, or by other means (such as from income earned by you), then you can apply for annulment of your bankruptcy. This includes paying off any interest amounts outstanding along with the principal amounts of such debts, the trustee’s fees, the trustee’s expenses, and any and all realisation charges in full. - Arranging a Composition
Arranging a composition implies arranging an agreement. A bankruptcy can be annulled if the bankrupt makes an offer to all his creditors to settle all their debts, by paying them a certain percentage of the amount outstanding to them, i.e., it is a payment of something less than the full amount repayable to the creditors. Such an arrangement is beneficial to the creditors, as under this arrangement they would get more money back than otherwise. This additional amount can be termed as “Dividend”.
For entering into search an arrangement, the bankrupt must first get approval of the trustee, once the trustee is satisfied with the terms of the arrangement, he formally makes a proposal to the creditors, who may or may not accept the offer. Bankruptcy is said to be annulled immediately on the acceptance of such offer. But if the offer is not accepted, then the bankruptcy continues. Additionally, after the composition offer has been accepted by the creditors, the court may “set aside” the agreement, if it finds it to be unreasonable or unlawful or for any other reason that it deems fit, such that it should not have been accepted in the first place. - Application to Court
If you think that you should not have been made bankrupt in the first place, (for example in case where someone stole your identity or misrepresented you), then in such cases you can apply to the court to annul the bankruptcy. If the court is satisfied with the evidence provided, then it will annul the bankruptcy
Consequences of Annulment – Once the bankruptcy is annulled, the bankrupt’s name will appear in the public record on the National Personal Insolvency Index, but the record will clearly show that the bankruptcy was annulled.