Today, we ask: what takes place if a deceased estate is insolvent? In other words, is there more debt than assets? Is bankruptcy a possibility in a deceased estate? The answer is yes.
There are two main approaches to handling an insolvent deceased estate. The first is under state and territory probate laws, such as the Probate and Administrations Act in New South Wales.
The other is bankruptcy, where either the estate administrator or a creditor can apply to the court for the estate to be declared bankrupt and managed under the Bankruptcy Act.
It gets somewhat technical from there, and it is essential to seek legal advice on which route to take: state and territory probate laws or bankruptcy.
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