Personal Law: Bankruptcy - Guides
Bankruptcy
9. Bankruptcy and Assets
Firm / Chambers:
Last updated: 23 Jun 2015
- Assets are anything you own at the time you are made bankrupt as well as anything you buy, receive or become entitled to during your bankruptcy.
- You will be able to keep certain assets but assets such as your home can be sold by your trustee for your creditors’ benefit.
- You cannot conceal, remove or dispose of any assets. If you do you may be prosecuted.
- There are also penalties for failing to disclose your assets. You may even be imprisoned for up to 12 months.
- If you acquire assets during your bankruptcy you must disclose these to your trustee in writing within 14 days or as soon as possible.
- All assets belonging to you at the start of your bankruptcy or that you receive during the course of your bankruptcy vest in the trustee except for certain exempt assets.
- This means your trustee has rights to deal with those assets including the rights to possess, control and sell.
- You cannot deal with property that belongs to your trustee even if that property remains registered in your name.
- Your trustee will obtain information about your assets in a number of ways including:
- by reading your statement of affairs;
- asking you;
- asking your creditors and third parties for information; and
- from searching various databases and registers such as the Personal Property Securities Register (PPSR) and the various state or territory land title databases.
- You will be allowed to keep exempt assets including:
- most ordinary household items;
- tools that you use to earn an income up to a certain value;
- vehicles such as cars or motorbikes where the total value of the vehicles minus the sum owing under finance is no more than a certain value;
- most amounts in regulated superannuation funds and payments from regulated superannuation funds received on or after your date of bankruptcy;
- life insurance policies for you or your spouse and policy proceeds received after your bankruptcy;
- compensation for a personal injury and assets bought with such compensation;
- assets you hold in trust for others for example your son or daughter's bank account; and
- awards made to you such as medals or trophies which have sentimental value so long as your creditors agree.
- Your trustee will recover or sell:
- houses, land, farms and business premises including leases;
- vehicles other than exempt vehicles;
- shares and other investments including shares held in your employer’s business;
- tax refunds for income earned before you became bankrupt;
- proceeds of a deceased estate where the death occurred prior to or during your bankruptcy; and
- competition prizes including lottery winnings.
- You should be aware that if you have a share in an asset under a co-ownership agreement your trustee can sell your share. If your co-owner is not bankrupt your trustee may agree to sell your share to them for market value.
- Under an antecedent transaction your trustee has powers to investigate assets you owned before your bankruptcy. If you gave away or sold assets for less than their value prior to your bankruptcy your trustee may recover these assets. This means that they make take possession of and sell them.
- A secured creditor cannot take possession of an asset simply because you are bankrupt however if you fall behind in your payments they can sell that asset to offset the debt owed.
- When you become bankrupt most legal actions you have begun must cease. Your trustee will determine whether to take these actions further. You must also advise your trustee of any other actions you believe should be pursued. Your trustee will assess the viability of these actions and decide whether you may proceed with them.
- If your legal claim relates to a personal injury or wrong done to you, your spouse or a family member or relates to the death of your spouse or a family member you may be entitled to pursue that claim even after you have become bankrupt.
- Your discharge from bankruptcy does not automatically return assets to you if they haven't been dealt with by your trustee. Your trustee may require several years to sell these assets. In the event your bankruptcy is annulled (cancelled) the unsold assets will be returned to you together with any surplus proceeds held.
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