During bankruptcy, your trustee may be able to claim, and sell, some of your possessions (assets). Your trustee can use proceeds from the sale of your assets to repay money you owe to creditors.
Assets may include, but are not limited to, real estate, vehicles, bank balances, tools, lottery winnings.
You must declare any assets you have when you apply for, and any you receive during, bankruptcy. There are penalties for not disclosing information to your trustee.
Below is information about what your trustee can and cannot claim.
Your house and property you own
Your trustee can claim any house/s or property you own as an asset.
For more information see What happens to my house?
Cash or money in bank account
The trustee can take any cash or money you have in a bank account at the date of bankruptcy, but will leave you with enough for modest living expenses.
For more information see What happens to my money?
Money you receive during bankruptcy
This is money that doesn't form part of your ordinary income. It can include superannuation, inheritance money, gifts of money and compensation payments.
Any prizes or lottery winnings you receive during bankruptcy are an asset that your trustee can claim.
Certain types of payments may be protected meaning the trustee can't claim them.
If you purchase assets (e.g. a house) using protected money, your trustee may not be able to claim this. For example, if you use 100% protected money to purchase the house, your trustee is unable to claim this. If you purchase a house using only a portion of protected money (e.g. 20%), the trustee may seek to claim 80% of the house. The trustee would then refund you the protected portion (e.g. 20%).
For more information about types of payments the trustee can claim see What happens to my money?
Tools of trade
These are tools you use to earn a living. You can keep these tools as long as the value is below a set amount. To work out their value, use the current market value (what you'd get if you sold them today). Not the price you paid for them. If they are above the set amount your trustee is able to sell them to help pay your debts.
Your household belongings
You're able to keep most ordinary household items of reasonable value e.g. furniture and appliances.
Will bankruptcy affect my partner’s assets?
It may affect your partner's assets if:
- They jointly own an asset with you - A joint asset is an asset owned by more than one person. Your trustee will have an interest in your share of the asset e.g. if you have a bank account in joint names, the trustee can claim your half of the balance.
- They are entering into bankruptcy - The trustee would have an interest in the full amount of any joint assets.
- They are in possession of an asset owned by you - Including money, real estate, motor vehicles and other property.
- They own assets that you contributed towards or helped purchase - This includes assets not registered in your name - e.g. a house or car.