What happens to your assets when you declare bankruptcy?
If you’re thinking about declaring bankruptcy, one of your biggest fears will be losing everything you have. But the truth is, quite a few of your assets are actually protected.
For example, you are allowed to keep:
- most personal household items, such as furniture
- motor vehicles you use as your primarily means of transport up to the threshold value, excluding any finance owing on them
- tools you use to earn an income up to the threshold value
- assets held on trust, such as a family trust or child’s bank account
- any compensation you received from a personal injury claim, as well as any assets you bought with that compensation
- life insurance policies (yours and your spouse’s), along with any proceeds you received from these policies after you were declared bankrupt
- awards with sentimental value, such as sporting and cultural medals and trophies
- most regulated superannuation fund balances and payments you received on or after the date you were declared bankrupt.
However, you probably will have to sell:
- any house or land you own
- your stocks and shares
- valuable furniture and jewellery
- any gifts and inheritances you received from a will
- motor vehicles and tools of your trade that exceed the threshold limit.
Your trustee will work hard to put you in the best financial position at the end of the bankruptcy process. They’ll determine what you can keep, and help you sell your qualifying assets.
Remember: Bankruptcy is not the end of the world. While you may lose valuable assets, you’ll gain something much more valuable: your financial stability.
At Rapsey Griffiths, we can provide you with a free debt assessment, and then go over all your options. You may be able to avoid declaring bankruptcy, and keep some of your assets, by reaching a debt agreement or personal insolvency agreement.
To talk to a registered bankruptcy trustee, and learn more about your options for dealing with personal insolvency, contact us today.