If you go bankrupt, you will still be able to keep some assets. The government’s policy is if you go bankrupt, you must be allowed to survive and still maintain a minimum level of comfort. The aim is not to have you live on the streets and with that policy in mind the government has protected certain assets in bankruptcy (up to the specified limits):
- Car – You can keep a car worth up to $7,350. If your car exceeds that value you will need to surrender it to your trustee in bankruptcy. The trustee will then sell the car and remit the $7,350 to you so that you can buy a cheaper car. The excess will be kept by your trustee and will be paid into your bankrupt estate.
- Income – You can keep your wage up to $967.92 p.w. (after tax). If you exceed this amount and have no dependents you will have to make statutory income contributions to your trustee in bankruptcy.
- Tools of Trade – if you are dependent on tools to earn a living (ie a tradesman) then you are allowed to keep tools worth up to $3,600.
- Household Furniture – You are able to keep necessary household furniture and personal possessions as well as educational and sporting equipment.
- Sentimental Items – Item of sentimental value must be declared to your Trustee and they can only be kept if the creditors approve it.
- Superannuation – most superannuation funds are protected but only if it is a complying fund and you haven’t paid any excessive contributions into the fund prior to bankruptcy. Excessive contributions prior to bankruptcy can be clawed back.
If you are considering bankruptcy, you should also carefully consider the restrictions which will be placed on you. Before declaring yourself bankrupt, make sure you speak to a personal debt advisor. We offer a free debt assessment for all people considering bankruptcy, so call today on 1800 676 598.