2.1 What happens to my assets?
An asset is anything of value that you possess, such as real estate, vehicles, cash or money in a bank account and tools.
During bankruptcy, your trustee may be able to claim and sell some of your assets. The proceeds from the sale of your assets can be used to repay the money that you owe to creditors.
2.2 What assets can I keep?
During bankruptcy, you are able to keep:
(a) ordinary household items;
(b) tools used to earn an income with a value of up to $3,800; and
(c) vehicle(s) with a value of up to $8,000.
It is important to note that any assets acquired during the period of bankruptcy will also vest in the trustee.
2.3 Will I lose my assets?
Under the Bankruptcy Act 1966, you cannot sell or deal with any of your assets that are not protected (protected assets are ordinary household items; tools and vehicles). The remainder of your assets vest in the trustee.
It is important to note that any assets acquired during the bankruptcy will also vest in the trustee.
2.4 Will I lose my car?
You can keep your vehicle that you use mainly for transport with a value of up to $8,000.
2.5 Will I lose my house?
A house is considered property and thus an asset. Property may include a house, apartment, land, farm or business premises. In bankruptcy, the trustee becomes the owner of the share of any house or property you own. The trustee has control over your property and can sell it to help pay your debts.
2.6 Will I lose my income?
If you earn over a certain amount, half of what you earn above this threshold can be used to pay off your bankruptcy. This threshold amount is updated twice a year and varies depending on several factors such as dependant persons, income tax payable, fringe benefits and child support payments.
There are many misconceptions surrounding income and what happens to it in bankruptcy. There are various jobs that are the responsibility of the trustee in managing a bankrupt’s income. If you have any questions or concerns, do not hesitate to contact our office to discuss your matter.
2.7 What happens to assets that have not been sold by the trustee by the discharge date?
Assets that have not been sold continue to be controlled by the trustee, despite the bankruptcy being discharged.
2.8 Can I avoid bankruptcy by accessing my superannuation to pay my creditors?
Superannuation can be accessed to assist in severe financial hardship, however only in some instances. Contact your superannuation fund to find out whether you are eligible to access your superannuation.
2.9 Can I keep my tax returns?
Tax refunds received from your income earned before the date of bankruptcy is regarded as an asset. Therefore, the tax refund amount vests in the trustee.
2.10 Do I still need to lodge a tax return if I am bankrupt?
Yes, you are still required to lodge a tax return if you are bankrupt.
2.11 What happens if I come into possession of money/assets of a high value?
If you come into possession of a large quantity of money or a valuable asset, such as receiving an inheritance of money, property or other assets; winning the lottery, or becoming the beneficiary of a deceased estate, and this significantly exceeds your unsecured debt, you may be in a position to end your bankruptcy.