Knowing what assets you can keep in bankruptcy will help you decide if it’s right for you…


If you’re considering bankruptcy, you’ve probably read a tonne about what you will lose. But what assets can you keep in bankruptcy?

There’s much less written about that.

And when it comes to your debts, you need to know which debts are not covered by bankruptcy to avoid problems down the track…

This article will clear all that up.

Bankruptcy: What assets can you keep?

The good news is: not all assets are included in the bankruptcy process.

Firstly, if you have assets used to perform a trade, you can keep these tools up to the (saleable) value of $3,700.

A vehicle or vehicles you own and use for transport up to the value of $7,800 are also allowed to remain with you. If you owe finance on the vehicle, the $7,800 threshold is determined by the vehicle’s value less the secured debt.

Usually up to $1,500 cash can  also be kept in your bank account to provide for your day-to-day living expenses.

Other items of property you may own that you can keep in bankruptcy include:

  • Household goods – appliances, furniture, clothing
  • Superannuation funds (unless you’ve made contributions prior to bankruptcy to defeat creditors)
  • Assets you hold on trust for someone else
  • Awards with sentimental value up to certain limits and creditor approval (e.g. sports trophies)
  • Personal injury claims and compensation
  • Life insurance policies

In some circumstances, you may even keep your house – though this will generally require a co-owner, family member or friend to purchase your interest as discussed here

Also, in relation to your income, you keep every after-tax dollar up to $55,838 (if you have no dependants). Above that, you will be required to pay 50c per after-tax dollar to your trustee. This threshold increases if you have dependants.

Debts: what do you need to pay, even if you go bankrupt?

As well as various assets being excluded from your bankruptcy, there are some debts not covered by bankruptcy.

It is important to be aware of these debts, as you will need to contact creditors to organise separate payment plans.

Debts not included in bankruptcy are:

  • Fines ordered by a court, including traffic and parking offences
  • Child support debts
  • HELP and HECS debts (student loans)
  • Debts incurred after bankruptcy commences
  • Debts incurred by fraud

Whether you become bankrupt voluntarily or involuntarily, you will be required to complete a Statement of Affairs (SOA).

In this SOA, you will be asked to list all of your assets and all of your creditors. It may be an offence to omit any items from this list. Undisclosed assets or debts may be uncovered during the investigations carried out by your bankruptcy trustee.

If you leave out a creditor from your SOA, they’re still included in your bankruptcy. So if it happens accidentally, it’s important to let your trustee know as soon as possible.

You now know about the assets you can keep in bankruptcy and the debts not covered by bankruptcy. However, it’s always best to speak to a professional debt advisor or insolvency professional to understand how bankruptcy will impact you.

To find out more right now, just pop your query in the live chat window (bottom right) on our website. One of our advisors will be able to help you decide if bankruptcy is right for you – or if there is a better option available.


Posted on 19-12-17 in Business insolvency, Debt management.