What if I receive money during my bankruptcy?

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How payments from the Coronavirus Economic Response Package affect people in bankruptcy

Economic support payments - are not claimable by your bankruptcy trustee as income or as an asset, regardless of whether you receive the payments before or after the date of bankruptcy.

COVID-19 supplement payments - are claimable by the trustee if you receive them before the date of bankruptcy and it remains in your bank account when you become bankrupt. During bankruptcy these payments are included in your after-tax income amount. If your after-tax income exceeds a set amount, you may have to make compulsory payments 

More information about these types of payment are available at Services Australia.

Early access to superannuation -  Should you receive payments from your superannuation under the Coronavirus Economic Response Package, there is no change to the way this payment is treated in bankruptcy. See Is my superannuation affected? for details on what happens to your super during bankruptcy.

The Australian Taxation Office has more information about super payments on their website at Early access to your super.

What if I receive money during my bankruptcy?

Apart from your ordinary income, other money and payments you receive may:

  • still form part of your income assessment or
  • be an asset your trustee can claim and sell.

If you receive a payment and you're unsure if it fall into the above categories, check with your trustee. The below information shows some common payment types and how they are treated in bankruptcy.

For information about changes in income see: My income has changed.

If your trustee is the Official Trustee (AFSA) you can notify us of money received using the online form below.

Can I keep my tax refund?

If you receive a refund, you shouldn't spend it before confirming with your trustee if you can keep it. For more information see: What happens to my money?

Can I keep my super?

This depends on how and when you receive it. Normally, your trustee can’t claim your super if you receive it after your bankruptcy begins. During bankruptcy, you must inform your trustee of any super you receive.

Some super organisations request evidence before they’ll release funds to you.  They may want to confirm that your trustee doesn't intend to claim your super. Contact your trustee to request this.

For more information see: What happens to my money?

I'm getting an inheritance, can I keep it?

Normally no. If you receive an inheritance, you need to inform your trustee.

For more information see: What happens to my money?

I'm receiving a redundancy payment, can I keep it?

Redundancy and leave payments you receive:

  • prior to entering bankruptcy are an asset the trustee can claim
  • after entering bankruptcy form part of your assessable income. If your income goes over a set amount you need to make compulsory payments.

You need to inform your trustee if you receive these types of payments.

How are compensation payments treated?

Whether you can keep compensation you receive depends on the type of payment. When you receive a compensation payment, you must inform your trustee. Your trustee can request supporting documents to determine whether they will claim it. If they claim it, they can use it to help repay your debts.

Note: This information is a guide only, as the legal treatment of these payments can be complex. You may wish to seek your own legal advice.

What about gifts and prizes?

If you receive money during your bankruptcy, you need to inform your trustee. This includes gifts from friends or family and prizes, such as winning a lottery. Your trustee can claim money you receive as an asset.

Notifying your trustee

If your trustee is the Official Trustee (AFSA) update us now.