What is the effect of bankruptcy?

Once a person becomes bankrupt, their assets, or property, with certain exceptions (compensation for personal injury, superannuation (generally), tools of trade and basic furniture and effect), vests in the Trustee in Bankruptcy whose job it is to then recover the property of the bankrupt for the benefit of creditors and to determine whether the bankrupt has improperly disposed of assets prior to bankrutpcy. Other effects of bankruptcy are;

• The bankrupt will be required to make contributions to the payment of their debts from income earned during the bankruptcy period once their income exceeds a certain level. Non payment of the contribution is likely to lead to an extension of the bankruptcy period from 3 years up to a maximum of 8 years.
• The Trustee will in most cases sell the bankrupt's home.
• A bankrupt must surrender his/her passport to the Trustee and if travel is required in the period, the bankrupt will need to make a good case to the Trustee to be allowed to leave the country.
• A bankrupt must disclose to anyone from whom they apply for credit of $4,497or more that they are an undischarged bankrupt.
• A bankrupt is precluded from managing a corporation or being a director during the bankruptcy.
• A bankrupt cannot own a car with a value in excess of $6,300
• Assets that form part of the bankruptcy include a bequest made under a will or a lottery win.
• The bankrupt is subject to the directions of the Trustee who must be attended upon as often as the Trustee reasonably requires.
• The bankrupt must produce his books and records to the Trustee and can be examined before a registrar on those records and dealings generally
• Fines or penalties imposed by a court are not affected by bankruptcy. Nor are council and water rates.
• HECS debts are not waived by reason of bankruptcy. Similarly, child maintenance orders must be paid.

             

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