Identifying Non-Divisible Assets in Bankruptcy

A creditor must establish that the debt owed was insolvent before commencing the proceedings of going bankrupt Australia law provides for concerning insolvent debtors. Insolvency for the creditor’s petition is established by proof of deed or the debtor having committed a bankruptcy act as spelt out within the bankruptcy legislation.

going bankrupt australia

You could be asking yourself what happens if I go bankrupt and what kinds of assets do I get to keep during a bankruptcy situation. Those that someone is allowed to keep in such event are known as non-divisible assets and they enjoy protection from the Trustee. In most cases, these assets include the following in most cases.

Household items

These include all household items deemed as necessary, such as furniture, laundry equipment, bedding, clothing, educational tools and sporting equipment. Under the legal provisions of going bankrupt Australia has, a bankrupt person who possesses antique furniture or multiple television sets does not however enjoy protection from the trustee for purposes of debt recovery.

Personal Items

Items of this nature can include wedding ring, photographs or other items regarded as having sentimental value. A bankrupt person should be aware nonetheless that items like these require being disclosed to the trustee. As well, your creditors need to approve certain items before being retained as non-divisible bankruptcy asset.

Motor vehicles

Normally, vehicles qualify as non-divisible bankruptcy assets if their value in equity is either $6,850 or lower. Such vehicles require should be for purposes of primary transportation. The Insolvency Trustee Services Australia regularly updates the equity values of such vehicles for public notification on how to go bankrupt in Australia.

Tools of Trade

One can keep tools valued up to $3,400 to help in earning some personal income. As well, the Insolvency Trustee Services Australia carries out routine valuation updates of these tools of trade.

Superannuation

Generally, funds held in the superannuation account of a bankrupt individual benefit from against the trustee. However, funds proceeding from ordinary course of business could be deposited into a superannuation account before the date of bankruptcy. In such cases, the trustee of a bankrupt estate can access the amount deposited for recovery purposes.

Life insurance policies for One or the Spouse

You may receive a payout for life insurance subsequent to your bankruptcy date. Such payout is equally afforded protection from being recovered by the trustee, as required by the laws of going bankrupt Australia provides.

Personal Injury Compensation

The funds one receives as compensation for personal injury are exempt from recovery by the trustee. In addition, assets bought using such money are also exempted from recovery by the trustee.

Assets Held for another Individual

Funds held in trust for another person, such as child’s bank account or education fund, too are exempt from being recovered by a trustee.

Several reasons make an act of bankruptcy important, which are vital to know if asking yourself what happens when you go bankrupt in Australia. It acts as a solvency test for a creditor to present a petition. Being unable to offset debts to creditors might be insufficient repetition unless a formal bankruptcy act is involved. The bankruptcy act also serves as the commencement date of bankruptcy for a person who is declared bankrupt on a creditor’s petition. An order of sequestration relates back to the earliest bankruptcy act committed by the debtor within the six-month period prior to presentation of the petition.

Leave a Reply

Your email address will not be published. Required fields are marked *