FAQs | What Happens When You Become Bankrupt?
Some assets are protected by the Bankruptcy Act, these assets include motor vehicles with an equity limit of up to , household furniture and personal effects, tools of trade up to auction value, and your superannuation which you have accumulated over time. All these assets are yours to keep.
Many people have assets that are under finance. If the value of the financed asset is less than the amount owed, you will be able to keep that asset provided repayments are kept up to date. When the payout figure on the loan is more than the value of the asset is said to have negative equity. Your bankruptcy trustee will not sell a negative equity asset as there will be no money left after paying out the loan. If you continue making the repayments, you can continue using the negative equity asset.
When you become bankrupt and own an asset that is not protected by bankruptcy and has positive equity, your equity in that asset will pass to the bankrupt estate. One option rather than selling the asset is to have your non-bankrupt partner enter into an agreement to buy the asset back from the bankrupt estate. For example, we have sold a boat at valuation to a bankrupt person’s father without putting the boat to auction as the boat had sentimental value to the family. If you have an asset that you would prefer not to lose, give us a call on 1300 060 122 or email firstname.lastname@example.org and we will discuss what we can do to help.
Nicholls & Co have a complementary ‘help desk’ to answer your questions on bankruptcy. Call Nicholls & Co on 1300 060 122 or email email@example.com.