Assets

  1. Will I lose my assets?
  2. What assets are generally considered protected? (table)
  3. Some assets which may be claimed by your trustee (table)
  4. Will I lose my house?
  5. Will I lose my car/motorbike?
  6. What if I have transferred my house or another asset of value to my spouse prior to bankruptcy?
  7. What happens to any assets that have not been sold by a trustee at the date of my discharge?

Will I lose my assets?

Once you become bankrupt you can no longer sell or deal with most of your assets or items of value, the exceptions being property protected under the Bankruptcy Act, as shown on the table below. Only the trustee (ASFA or a registered trustee), or a secured creditor is able to sell or deal with your assets. The trustee may sell your assets for the benefit of your creditors.

Assets include anything of value belonging to you at the date of bankruptcy together with assets acquired by you before your discharge including lottery wins, prizes of value etc. Your interest in the family home, land, money in bank accounts, vehicles exceeding $7,800.00 in value, stocks and shares, antiques and other personal property of saleable value are all included. Any interest you have or acquire during bankruptcy as a beneficiary of a deceased estate belongs to the trustee.

Certain assets are protected by the Bankruptcy Act which means they cannot be sold by your trustee to pay creditors. The property protected by the Bankruptcy Act includes: personal effects, limited tools of trade, necessary household furniture and appliances as well as life insurance and superannuation policies and your primary means of transport up to $7,800.00 in value (eg. car or motor bike).

The following assets are generally considered protected property meaning that your trustee cannot claim them.

Assets Generally Considered Protected
Ordinary clothing Protected property - you can keep it.
Most household furniture, appliances and effects Protected property - you can keep it.
Tools of trade (where value under $3,700.00). A bankruptee may keep tools used to earn an income that are worth no more than $3,700.00. If you have tools worth more than this amount, the trustee may sell some of them.
Superannuation payments received AFTER date of bankruptcy (subject to certain limits) Bankrupts may be entitled to keep these.
Life insurance and endowment policies The treatment of these payments depends on the nature of these payments. More detailed information is available at Compensation and personal insurance payments.
Compensation payments for personal injury received by the bankrupt Bankrupts may be entitled to keep these and keep property bought with these funds. More detailed information is available at Compensation and personal insurance payments.
Property of a non-bankrupt person who you live with The non-bankrupt person can keep their property unless they joint own it with you and it is an unprotected asset.
Motor vehicle that is not secured or leased and the value of the vehicle is under $7,800.00. If your vehicle(s) have a value over $7,800.00, the trustee can sell those vehicle(s).
Vehicle under secured finance where the aggregate equity is under $7,800.00. Equity is calculated by the value of the vehicle minus money owed under finance for the vehicle. If your vehicle(s) have an aggregate equity over $7,800.00, the trustee can sell those vehicle(s).
Property held in trusts This is a complex matter and legal advice is recommended.
Items of a sentimental value (medals, trophies, your wedding ring) Protected property and you can keep it.
Defence service loans If the property is under a Defence Service Homes mortgage it cannot be sold by the trustee without the prior approval of the Secretary of the Department of Veterans' Affairs.

The following assets may be claimed by your trustee:

Some assets which may be claimed by your trustee:
House May be sold by the trustee or the bank that issued the mortgage. Consequently, you may be forced to leave even if you don't want to move.
Rent payments received from tenants living in a house that you owned prior to your bankruptcy These become part of your bankrupt estate and you cannot keep them. The payments may be used by the trustee to maintain the property, reduce any associated mortgage or to pay a dividend to creditors.
Car If your vehicle(s) have an aggregate equity over $7,800.00, the trustee can sell those vehicle(s). Equity is calculated by the value of the vehicle minus money owed under finance for the vehicle.
Cash you have with you or in a financial institution account If you have funds in a bank account and you also owe the bank/credit union some money, the bank/credit union is allowed to keep what is in your account. All other funds you have on your date of bankruptcy become the trustee's.
Financial institution accounts You can open new accounts or keep your existing accounts, provided that the financial institution is willing to keep you as a customer. You can discuss with the institution directly.
Income If you are a low-income earner you will not have to pay contributions but you may make voluntary payments to your trustee. If your after-tax income exceeds $56,674.80p.a (if you have dependants, this amount increases per dependant), you will have to pay contributions from your income to your trustee.
Tax refunds for income earned BEFORE you became bankrupt If you have a debt to the Australian Taxation Office, they may keep your tax refunds. If refunds are not kept by the Tax Office, they belong to the trustee.
Tax refunds for income earned AFTER you became bankrupt Tax refunds due to you that relate to income periods after your date of bankruptcy are treated as income for contributions purposes.
Sentimental property (as defined in the Bankruptcy Act) Creditors can vote regarding whether a bankruptee can keep this. If creditors vote that they can't be kept by the bankrupt, the trustee will sell them.
Superannuation payments received BEFORE date of bankruptcy (subject to certain limits) These become the trustee's on your date of bankruptcy.
Business premises and leases These become the trustee's on your date of bankruptcy and may be sold by the trustee.
Shares and other investments (including shares held in your employer's business) These become the trustee's on your date of bankruptcy and will be sold by the trustee.
Money that is owed to you The right to recover and keep money that was owed to you at your date of bankruptcy becomes the trustee's. This means that you cannot chase these debts and any money that is paid to you or is recovered by the trustee cannot be spent by you and remain the trustee's.
Proceeds of a deceased estate (where the person dies before or during your bankruptcy) These belong to the trustee and you cannot keep them.
Lottery winnings and/or other competition prizes These belong to the trustee and you cannot keep them.
Legal actions that you started or are thinking about starting It is up to your trustee to decide whether the claim should be pursued for the benefit of your creditors, unless the claim relates to a personal injury or wrong done to you or your spouse or a member of your family, or the wrongful death of a member of your family.

Will I lose my house?

This depends on your particular circumstance. Your trustee has to consider any equity that you have in the property in the interest of your creditors. This could mean that the property will have to be sold and the profits shared amongst your creditors.

If the property is jointly owned the trustee will consider selling your interest in the property to the joint owner provided they are not also bankrupt.

If you have a mortgage and have been unable to meet your repayments the creditor may consider selling the property to cover the repayments. Any shortfall in the sale will be listed as a debt in your bankruptcy. Any profits from the sale will go to your trustee.

If the property is under a Defence Service Homes mortgage it cannot be sold by the trustee without the prior approval of the Secretary of the Department of Veterans' Affairs.

Will I lose my car/motorbike?

A bankruptee may keep cars or motorbikes used mainly for transport up to an amount of $7,800.00.

The amount refers to the equity in the vehicles (the value of the vehicles less the sum owing under finance).

Check out the "What happens to my vehicle?" section of the AFSA website for more detailed information.

What if I have transferred my house or another asset of value to my spouse prior to bankruptcy?

If the transfer was done in the last 5 years, your trustee will investigate the transaction. The trustee maintains the power to void transactions and recover the asset if the transfer was to defeat creditors or if the transfer was less than the market value or if it was in preference to other creditors.

It is an offence under the Bankruptcy Act to dispose of or transfer property prior to bankruptcy with the intent of defeating your creditors!

What happens to any assets that have not been sold by a trustee at the date of my discharge?

You do not have those assets returned to you after you are discharged from your bankruptcy. The trustee can sell those assets at any time after your discharge date.

Note: These F.A.Q's are for information only and should not be relied on as legal or financial advice. Your personal circumstances are not considered in any of the content above.