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Can Superannuation Contributions be clawed back in Bankruptcy

By Administrator 30 December, 2014

Superannuation is usually protected in bankruptcy unless you have made some excessive or unusual contributions into the super fund in an attempt to defeat your creditors.

The best way to explain this is by looking at some examples:

Example 1

Situation: The compulsory employer paid superannuation contributions are made direct by the employer into the superannuation fund.

Answer: Employer paid contributions are usually paid under an employment contract and are paid as a percentage of your salary (currently 9%). These contributions would not be challenged by a Trustee in Bankruptcy.

Example 2

Situation: The debtor six months prior to bankruptcy sells a house and contributes $100,000 into his superannuation fund as a lump sum contribution. At the time the lump sum contribution was made he had $150,000 of unpaid debts.

Answer: In this situation, the Trustee in Bankruptcy would regard the $100,000 lump sum contribution into the super fund as a transaction to defeat creditors. The equity in the house ($100,000) would have been available to his creditors (which were $150,000 at the time). Given his creditors exceeded his assets when he made the lump sum transaction he would have been regarded as insolvent. The Trustee in Bankruptcy would have strong grounds to “claw back” the $100,000 from the superannuation fund.

To speak to one of specialist debt consultants regarding your options please call us on 1800 676 598 or fill in the form to the right. Bankruptcy is a specialist area so only speak to an expert that you can trust.