Bankruptcy
10. Bankruptcy and Income
Firm / Chambers:
Last updated: 23 Jun 2015
- You can continue to work and earn an income while you are bankrupt and there is no need for you to disclose your bankruptcy in employment applications. However you:
- cannot manage or be a director of a company unless you obtain court approval;
- may be restricted or prevented from continuing in certain trades or professions by certain licensing bodies;
- may be unable to hold certain public positions; and
- must advise people you do business with that you are bankrupt if you are in business and trade under a business name which is not the same as your own.
- Failure to do these things may lead to penalties.
- You must disclose any income you earn to your trustee. Failure to so may lead to penalties. You must also let your trustee know if your income changes or is likely to.
- You will be required to make contributions from your income. This is usually half of what you earn if your after-tax income exceeds a certain limit and you meet certain thresholds.
- The threshold relevant to you will depend on how many dependents you have. Dependents are those who live with you and rely on you for financial support such as children and your spouse.
- In exceptional circumstances you may apply for a higher threshold on the basis that you would otherwise suffer hardship. The exceptional circumstances are:
- ongoing medical expenses;
- costs of child care where this is needed for work;
- particularly high rent where this is unavoidable;
- significant cost of travelling to and from work; and
- loss of contribution to household costs by others such as your partner.
- Your hardship application must be in writing. Your trustee will determine your application within 30 days of receipt and will provide written reasons for their decision.
- Each year your trustee will determine your obligation to make income contributions.
- If you are required to make such repayments your trustee will provide you with a notice of assessment detailing the amounts due and how you can make payments.
- Income has a broad meaning and may include:
- wages, salary and income earned in Australia or overseas;
- tax refunds and taxable fringe benefits;
- salary sacrifice arrangements;
- superannuation receipts, annuities and pensions;
- business profits;
- loans from associated entities;
- income you earn that is paid to someone else; and
- superannuation contributions greater than 9%.
- Failure to pay your required income contributions may lead to your trustee:
- deducting amounts from your income or bank account;
- objecting to your discharge, extending your bankruptcy and assessing additional income contributions during this time; and
- obtaining a court judgment against you for unpaid income contributions and taking enforcement action against you after your discharge.
- If you do not agree with your trustee’s income assessment you should discuss your concerns with them.
- If you still disagree you can request a review of your trustee’s decision by the inspector-general. The request must be in writing and lodged within 60 days of you being notified of the assessment.
View more Information on Personal Law