How do I go bankrupt?

How do I go bankrupt? The provider of this information is Insolvency & Trustee Services Ausralia.

Need further information? Visit our legal forum where you can ask questions and search for similar topics. HOW DO I GO BANKRUPT? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition Why choose bankruptcy? If you cannot pay your debts, and have been unable to come to a compromise or arrangement with your creditors, then you may decide to go bankrupt. Bankruptcy is a process where people receive the protection of the Bankruptcy Act. The Prescribed Information booklet details alternatives to bankruptcy and the obligations and consequences of bankruptcy. Financial counsellors and other advisers can also give you information about bankruptcy and alternative options. See the ITSA website http://www.itsa.gov.au or contact ITSA offices (see rear cover) for booklets or lists of contacts. Warning: The consequences of bankruptcy are serious. It should only be chosen after you have looked at every other option. Can anyone go bankrupt? There are no income, asset or debt limits if you decide to apply for bankruptcy. To become bankrupt you: cannot have an unfinalised Part IX Debt Agreement or Part X agreement in place, and must be ordinarily resident in Australia; or have owned a house or business, or have carried on a business, in Australia, or must be personally present in Australia when you lodge your debtor’s petition. If you have any questions please ask ITSA. Do not lodge your bankruptcy documents if you do not understand how it will affect you. How do I become bankrupt? To apply to become bankrupt you need to complete and lodge the following three documents with the ITSA office in your state or territory. These documents are available from ITSAs website and offices, registered trustees and many financial counsellors. Note: you can lodge your documents in person, by post or by fax you cannot lodge your documents by email. 1. Debtor’s Petition This is your application to become bankrupt. You need to: answer every question sign and date it in front of a witness (who must also sign and date it). Warning: The presentation of a Debtor’s Petition is an act of bankruptcy. If your Debtor’s Petition is rejected, a creditor can use this to apply to the Federal Court or Federal Magistrates Service to make you bankrupt. 2. Statement of Affairs This document identifies who you are. It will provide your trustee with essential information, such as your income, assets, debts and business dealings. You need to: attach any documents if asked to do so sign it. Warning: There are penalties under the Bankruptcy Act for providing false or misleading information. 3. Acknowledgement that you have received and read the Prescribed Information booklet The Bankruptcy Act prescribes that information about alternative options to bankruptcy and the consequences of bankruptcy must be given to people who are contemplating bankruptcy. You need to: read the booklet sign and then detach the Acknowledgement on page 19 attach the signed Acknowledgement to your bankruptcy papers. Creditors can make you bankrupt One of your creditors may apply to the Court in a Creditor’s Petition to make you bankrupt if you have committed what is called an act of bankruptcy. The most common act of bankruptcy relied on by a creditor is a failure to comply with a bankruptcy notice requiring that the creditor’s debts, of at least $2,000, be paid within 21 days. What happens after I lodge my bankruptcy documents with ITSA? ITSA will decide whether to accept your Debtor’s Petition within one business day (Monday to Friday) of you lodging your documents. ITSA examines your documents to make sure that: they have been fully and properly completed and signed all necessary attachments are included there is no reason to reject your petition. ITSA will not accept your documents if there is information or attachments missing. Your documents will be returned to you for amendment. In a very few cases, your Debtor’s Petition may be rejected if ITSA considers that: you are able to pay your debts within a reasonable time, and either you have previously been bankrupt on your own petition three or more times or once in the last five years, or you are unwilling to pay one or more creditors or creditors in general. ITSA will talk to you before deciding to reject your petition. If your petition is rejected, ITSA will write to you to explain why your Debtor’s Petition has been rejected and how to obtain a review of this decision. More information is available in the pamphlet: Debts and Creditors: What happens to them if I go bankrupt? If your Debtor’s Petition is accepted You become bankrupt within one day. You are given an administration number. ITSA records your bankruptcy on the NPII (National Personal Insolvency Index) database. Your name will appear on the NPII forever. A trustee will administer your bankruptcy. ITSA will be your trustee unless a registered trustee has consented to be your trustee. Your assets, income and debts must be disclosed to your trustee. Your trustee advises your creditors of your bankruptcy and provides them with a summary of your Statement of Affairs. Your trustee will sell your divisible assets. Your trustee will assess you for income contributions. You may have to pay contributions for the benefit of your creditors. You are released from certain debts when you are discharged from bankruptcy. However, there may be some debts you still have to pay. More information is available in the pamphlets: Debts and Creditors: What happens to them if I go bankrupt? Assets: What happens to my assets if I have to go bankrupt? Contributions: Will I have to make payments from my income? Your trustee If you make yourself bankrupt you may choose your own trustee to administer your bankruptcy. If you do not choose a trustee, ITSA will be your trustee. If a creditor makes you bankrupt, they choose your trustee. During your bankruptcy, your creditors may decide to change your trustee, and trustees may also obtain the consent of another trustee to replace them. When will I be discharged from bankruptcy? A discharge from bankruptcy normally happens automatically 3 years and 1 day after your Statement of Affairs has been lodged with and accepted by ITSA. In some circumstances, the period of your bankruptcy may be extended to either 5 or 8 years if your trustee lodges an objection to your discharge with ITSA. An objection is usually lodged because a bankrupt has not co-operated with the trustee or there has been some misconduct. Your bankruptcy can only be annulled (cancelled) earlier through: payment of your debts in full, or an offer to creditors (composition), or application to the Court. More information is available in the pamphlets Annulment and Discharge Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Discharge: How and when does my bankruptcy end?

Discharge: How and when does my bankruptcy end? The provider of this information is Insolvency & Trustee Services Ausralia.

DISCHARGE HOW AND WHEN DOES MY BANKRUPTCY END? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition What is discharge? Discharge is the end of bankruptcy. When will I be discharged from bankruptcy? Discharge from bankruptcy normally happens automatically 3 years and 1 day after your Statement of Affairs was lodged with and accepted by ITSA. If you have been made bankrupt by the Court your Statement of Affairs was probably lodged some time after the date of bankruptcy. There is no need to apply for discharge and there is no fee. You can get written confirmation of your discharge from bankruptcy by: asking your trustee searching the public record (the National Personal Insolvency Index or NPII database). More information is available in the pamphlet: Searching the Public Record In some circumstances, you can be bankrupt for longer than 3 years for reasons discussed later in this pamphlet. What happens after discharge? Your name will appear on the NPII forever. The administration of your bankruptcy by your trustee may continue after you are discharged. Your trustee may not have finalized investigations or the sale of assets, or you may still have income contributions to pay. What are my legal obligations after discharge? You must assist your trustee to finalise the administration of your bankruptcy. You must advise your trustee of changes in your address or financial circumstances if requested to do so. You must pay outstanding income contributions. Assets in your bankruptcy which have not been sold by your trustee before the date of your discharge are not automatically returned to you. In limited circumstances, your trustee has a time limit of 6 years after your discharge to deal with assets (other than cash). More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt? Your trustee is the person who administers your bankruptcy or Part X agreement; either a registered trustee or ITSA. See the Prescribed Information booklet for definitions of other bankruptcy terms What happens to my debts after I am discharged? You are released from certain debts when you are discharged from bankruptcy. However, there may be some debts that you will still have to pay. Debts you still have to pay during and after bankruptcy 1. Some debts are not provable in bankruptcy. Creditors with these types of debt cannot receive any money from your bankrupt estate but they can continue debt recovery action against you even during bankruptcy eg: penalties and fines imposed by a court damages from accidents (eg car accidents) unless, before bankruptcy, the sum of damages has been fixed by a court judgment or you have a written agreement with the other party student assistance/supplement loans. 2. Assets that you wish to keep but which are secured to a creditor (eg house mortgage). You will need to keep paying for these assets or the creditor will take them back. More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt? 3. Any new debts created on or after your date of bankruptcy. Debts you still have to pay after your discharge Creditors of certain types of debt (provable debts) can receive money from your bankrupt estate and can also continue debt recovery action against you after you are discharged from bankruptcy eg: child support debts maintenance accumulated HECS (Higher Education Contribution Scheme) debts owing when you became bankrupt, excluding any amount shown on a notice of assessment issued by the Australian Tax Office (ATO) before you became bankrupt – ask the ATO if you need more information debts incurred by fraud. More information is available in the pamphlet: Debts and Creditors: What happens to them if I go bankrupt Released from debt – you are no longer liable for or have to pay this debt Provable debt – an amount for which a creditor is entitled to claim a dividend in your bankruptcy Can I be discharged in less than 3 years? No. However, in some circumstances, you may be able to have your bankruptcy annulled (cancelled). A bankruptcy can be annulled in three ways: 1. Payment in full – your creditors and your trustee’s fees and expenses have been paid in full. This usually happens because your trustee has sold assets and/or you have paid money ot your trustee from your income or another source. 2. Composition or arrangement – creditors accept an offer made by you through a trustee for finalizing your debts. This usually arises when a friend or family member helps by offering a lump sum to your creditors. The offer must also provide for payment of your trustee’s fees. 3. Application to the Court – in some limited circumstances, you may apply to the Federal Court or Federal Magistrates Service to have your bankruptcy annulled if you think you should not have been made bankrupt or should not have lodged your Debtor’s Petition. You should seek legal advice before making such an application. More information is available in the pamphlet: Annulment: Can my bankruptcy be cancelled? Can I be bankrupt for more than 3 years? The period of your bankruptcy may be extended to 5 or 8 years if your trustee lodges an objection to your discharge with ITSA. Your trustee may lodge an objection on a number of grounds, such as your failure to: provide information to, and assist, your trustee disclose to your trustee all income pay assessed income contributions explain how money was spent reveal all assets and creditors. You may request a review of an objection. More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Debts & Creditors: What happens to them if I go bankrupt?

Debts & Creditors: What happens to them if I go bankrupt? The provider of this information is Insolvency & Trustee Services Ausralia.

DEBTS & CREDITORS: WHAT HAPPENS TO THEM IF I GO BANKRUPT? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition How will bankruptcy affect my debts? A debt is money that you owe to a creditor. Once you are bankrupt, creditors with debts included in bankruptcy should stop contacting you. You must include all your debts in your Statement of Affairs, including: debts you owe jointly with someone else any loans to you from friends and relatives. Your bankruptcy will not affect a creditor’s right to pursue another person, such as: a person who is a guarantor for your debts debts in joint names with another person (eg your wife or husband). You are released from certain debts at the end of your bankruptcy (after discharge from bankruptcy). However. there may be some debts that you will still have to pay. Debts you still have to pay during bankruptcy 1. Debts which are not provable in bankruptcy. Creditors of this type of debt cannot receive any money from your bankrupt estate but they can continue debt recovery action against you even during bankruptcy eg: penalties and fines imposed by a court damages from accidents (eg car accidents) unless, before bankruptcy, the sum of damages has been fixed by a court judgment or you have a written agreement with the other party student assistance/supplement loans 2. Any new debts you run up on or after your date of bankruptcy. Debts you still have to pay after your bankruptcy ends Creditors of certain types of provable debt can both receive money from your bankrupt estate and continue debt recovery action against you after your bankruptcy ends eg: child support debts maintenance accumulated HECS (Higher Education Contribution Scheme) debts owing when you became bankrupt, excluding any amount shown on a notice of assessment issued by the Australian Tax Office (ATO) before your bankruptcy – ask the ATO if you need more information debts incurred by fraud. Note: non-payment of essential services (electricity, water, telephone etc) and parking/traffic fines can cause difficulties. See Unsecured Creditors for further details. Exempt assets are assets or property which cannot be sold in bankruptcy by the trustee More information on assets is available in the pamphlet: Assets: What happens to my assets if I go bankrupt? How will my creditors be affected? Secured creditors A secured creditor is a creditor who holds a security over your asset which entitles them to take and sell the asset if you fall behind in payments. Examples of secured creditors include: Banks with a mortgage over a house Finance companies with a chattel mortgage, hire purchase, lease or bill of sale over a car, furniture or electrical goods Creditors secured by government legislation over houses and land, such as council/shire rates and water rates. If you become bankrupt, secured creditors will probably contact you to find out what you plan to do. If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask a financial counsellor or your trustee. If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back. A secured creditor cannot take an asset back just because you are bankrupt. Your trustee can sell a non –exempt asset if it is of value, even if you are paying it off (eg a house). In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment, commission). Creditors who hold a security deposit or bond (eg a landlord) are entitled to keep it to reduce your debt. The ATO can keep your tax refund and offset it against any debt you owe to the ATO and/or other Commonwealth office (eg Child Support Agency, Centrelink). If a secured creditor incurs a loss from the sale of the secured asset, they may claim the loss in your bankruptcy as an unsecured creditor. Unsecured creditors An unsecured creditor is a creditor who generally does not have the right to take back an item you bought but have not paid for. Examples may include: banks, finance companies and credit unions for person loans, credit cards and store cards telephone and internet providers tradespeople such as builders and electricians professionals such as doctors and lawyers. If you become bankrupt, any legal action by unsecured creditors against you, such as a summons, garnishee (a compulsory deduction from your income or bank account) or recovery action by a sheriff or bailiff, must stop. If any unsecured creditors demand that you pay their debt, you should immediately tell your trustee who should inform the creditor of the terms of your bankruptcy. If you are being harassed or coerced about debts you may have rights under the Trade Practices Act. For further information visit the Australian Competition and Consumer Commission website http://www.accc.gov.au or call the Infocentre 1300 302 502. Providers of essential services (eg electricity, gas, telephone, water) to your home may disconnect the service if you do not pay your current account or pay a security deposit/bond. If you later move to another home and still owe them money, you may be required to pay an increased deposit/bond to obtain the service. In most States, if you do not pay debts for parking, traffic and other infringements of State laws, your driver’s licence and/or your motor vehicle registration may be suspended until payment is made. Bankruptcy does not stop such suspensions. Debts and creditors can be difficult to sort out. Talk to a financial counsellor or ITSA if you are unsure about what type of debts or creditors you have. ITSA offices can provide you with a list of advisers (see rear cover or http://www.itsa,gov.au) Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Can I Appeal? Review and appeal of trustee and administrator decisions

Can I Appeal? Review and appeal of trustee and administrator decisions The provider of this information is Insolvency & Trustee Services Ausralia.

CAN I APPEAL? REVIEW AND APPEAL OF TRUSTEE AND ADMINISTRATOR DECISIONS Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. January 2004 Edition About Bankruptcy Regulations Bankruptcy Regulation is an independent branch of ITSA which reports directly to the Inspector-General in Bankruptcy. It is responsible under the Bankruptcy Act for monitoring the standards of trustees and debt agreement administrators. Its role includes, on behalf of the Inspector-General in Bankruptcy, dealing with requests for review of certain decisions made by trustees and dealing with complaints against trustees and administrators. If Bankruptcy Regulation is unable by law to help, it will advise you of your options, such as making an application to the Court. See the Prescribed Information booklet for definitions of bankruptcy terms ITSA (Insolvency and Trustee Service Australia) is a Commonwealth government agency. ITSA is the trustee when a registered trustee is not appointed. Review procedures Trustees Trustees may make decisions which affect the rights of people whose estates are being administered under the Bankruptcy Act, their creditors and other people. If you have a query or concern about a trustee decision you should first contact them directly to seek resolution. If you do not resolve the matter you may be able to use the review process within the Act. You may ask for a review of certain decisions: in the first instance to your local Bankruptcy Regulation office (see rear cover) at a later stage, if required, to the Administrative Appeals Tribunal. Other decisions may be reviewed by an application to the Court. Debt agreement administrators If you are a debtor, a creditor or someone who is party to a specific Debt Agreement and you have a query or concern about the conduct of an administrator you should first contact them directly to seek resolution. If you do not resolve the matter you may refer it to Bankruptcy Regulation. More information is available in the pamphlet: Resolving Complaints about Trustees and Administrators Decisions which can be reviewed Bankruptcy Regulation may review the following decisions made by a trustee: filing of a notice of objection to discharge issuing an income contribution assessment rejecting a hardship application with respect to an income contribution assessment rejecting an application for early discharge (applies only to bankruptcies occurring prior to 5 May 2003. Bankruptcy Regulation must also review such a decision if requested by the Ombudsman. You have a 60 day time limit from the date the trustee informs you of their decision in which to loge a request for review. You cannot apply to the Administrative Appeals Tribunal for review unless: a prior review request has been made to Bankruptcy Regulation the review request has been assessed. Bankruptcy Regulation does not have the authority to review any other decision made by a trustee, such as: selling an asset (eg house, property, stock, plant and equipment, motor vehicle etc) admitting/rejecting a proof of debt. If you are unable to resolve the matter with the trustee, and the decision cannot be reviewed by Bankruptcy Regulation, your only remedy may be to apply to the Court. For example, a creditor or bankrupt may apply to the Court for a review of a decision by a trustee to admit or reject a proof of debt. The application to the Court must be made within 21 days form the date of the decision. What documentation do I need? Your request to Bankruptcy Regulation for a review must be: in writing and lodged with Bankruptcy Regulation, and accompanied by: a copy of the document showing the trustee’s decision an explanation of why you consider the decision should be reviewed any documents to support your request. Time period of review Bankruptcy Regulation must decide within 60 days after you lodge a request for review whether to review the decision and, if so, make a decision on the review. What does it cost? There is no charge for a review undertaken by Bankruptcy Regulation. How is my request handled? Your request for a review will be acknowledged in writing within 7 days of receipt. Bankruptcy Regulation will contact the trustee to find out if further documents are available to assist the review process. You may need to provide further documents to enable the process to proceed. If the investigation of your review is not finalized within 28 days, you will be informed of the progress of the investigation. Where Bankruptcy Regulation has not made a decision within 60 days, it is taken to have reviewed the trustee’s decision and confirmed it. If your review request is not upheld, Bankruptcy Regulation will advise you of your further rights of appeal. Decision in writing Bankruptcy Regulation will provide you and the trustee with a written decision. Review of Trustee’s Fees A creditor or bankrupt dissatisfied with a registered trustee’s claim for fees and costs may request the Official Receiver for a review. This is called a ‘taxing of costs’. The request must be made within 28 days of you becoming aware of the amount of the claim. Generally the person who requests that the claim be taxed will bear the costs of taxation which is charged at an hourly rate. If taxation results in a reduction of at least 15% in the amount of a claim, the trustee must bear the costs of the taxation. ITSA’s trustee fees imposed in a bankruptcy may be waived or remitted by application to the Inspector-General in Bankruptcy. The grounds for remission of waiver are that: payment of the fee will cause undue hardship to the person liable to pay the fee; or there are exceptional circumstances in which it is proper and reasonable to do so. Applications, in writing, may be sent to Bankruptcy Regulation (see rear cover) or any ITSA office. A decision will be made usually within 28 days of an application. What else can Bankruptcy Regulation help with? If you have a complaint relating to the actions of a trustee, debt agreement administrator or a controlling trustee, you should follow the procedure set out in the pamphlet: Resolving Complaints about Trustees and Administrators Further information about what you can expect from Bankruptcy Regulation and ITSA generally is available in the Client Service Charter Where to contact us ITSA website wwwitsa.gov.au For more information please contact a Bankruptcy Regulation Office Queensland and NT Bankruptcy Regulation PO Box 10443, Adelaide St Brisbane QLD 4000 Ph: 07 3360 5425 Fax: 07 3360 5402 email: br.qld@itsa.gov.au New South Wales and ACT Bankruptcy Regulation Level 8, 135 King St SYDNEY NSW 2000 Ph: 02 8233 7857 Fax: 02 8233 7805 email: br.nsw@itsa.gov.au Western Australia Bankruptcy Regulation GPO Box H536 Perth WA 6001 Ph: 08 9268 1204 Fax: 08 9268 1287 email: br.wa@itsa.gov.au Victoria and Tasmania Bankruptcy Regulation Level 10, 360 Elizabeth St MELBOURNE VIC 3000 Ph: 03 9272 4800 Fax: 03 9272 4940 email: br.vic@itsa.gov.au South Australia Bankruptcy Regulation GPO Box 2604 ADELAIDE SA 5001 Ph: 08 8112 4315 Fax: 08 8112 4304 email: br.sa@itsa.gov.au

Assets: What happens to my assets if I go bankrupt?

Assets: What happens to my assets if I go bankrupt? The provider of this information is Insolvency & Trustee Services Ausralia.

ASSETS – WHAT HAPPENS TO MY ASSETS IF I GO BANKRUPT? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition What are assets? Assets or property are anything you own when you become bankrupt or anything you buy or receive before the end of your bankruptcy. Income you earn during bankruptcy is not included but will be taken into account in your income contributions assessment. More information is available in the pamphlet: Income Contributions Going bankrupt will affect your assets. Some assets are exempt, which means you may keep them. Some assets are non-exempt or divisible, which means your trustee may sell them for the benefit of your creditors. What assets may 1 keep? The Bankruptcy Act sets out a list of exempt or protected assets, for example: most ordinary household or personal items, such as clothes, furniture, kitchen appliances and equipment, a TV, video recorder, stereo, washing machine, and items mainly for the use of children or students in the house There are circumstances where some of these things would be sold, such as antique furniture, and electrical equipment of significant value. tools used to earn an income, up to a limit of $2,900 (indexed) – tools over this limit may be sold by your trustee Indexed means the amount regularly changes in line with the Consumer Price index or the base pension rate vehicles (cars or motorbikes) used mainly for transport, up to a combined limit of $5,800 (indexed). The limit refers to your equity in the vehicles (the value of the car minus the sum owing under finance) superannuation and life assurance policies up to the pension Reasonable Benefit Limit (as worked out under the Income Tax Assessment Act 1936) compensation for a personal injury (eg from a car accident or workers compensation) assets bought with protected monies Protected monies are monies that cannot be claimed by a trustee eg personal compensation money, certain government grants re-establishment grants to farmers, including grants under the Rural Adjustment Act 1992 or Farm Household Support Act 1992 property protected under the Defence Service Homes Act 1918 an asset held by you in trust for another person (eg a child’s bank account). Awards of a sporting, cultural, military or academic nature made to you, such as medals or trophies but not cash or jewellery, and claimed as having sentimental value may be exempted by a vote of creditors. If you are buying an exempt asset under finance, you will only be able to keep it if you continue to pay for it. Warning: There are penalties if you fail to: disclose assets on your Statement of Affairs disclose to your trustee in writing within 14 days any assets you acquire during bankruptcy. What assets will my trustee deal with? Your trustee will sell or distribute your non-exempt (divisible) assets and any assets that have a value over a specified limit. Your assets include those you own when you become bankrupt, or any you acquire or receive before the end of your bankruptcy. These assets may be in: Australia or overseas your possession or someone else’s. Examples of divisible assets include: houses, apartments, land, farm and business premises (including leases) cars, trucks,vans, caravans, trailers, motorbikes, boats and aircraft shares and other investments (including shares held in your employer’s business) tax refunds for income earned before you became bankrupt money owed to you livestock and farming crops your right as a beneficiary in a deceased estate, even if the person dies during your bankruptcy antiques, collectables and jewellery business and business assets, including goodwill, stock, equipment, machinery, vehicles, fixtures and fittings and an interest in a partnership leaseholds, franchises, licences and patents a right to commence or continue legal proceedings/legal actions money with deposit taking organizations (eg banks, credit unions, licensed totalisator/betting agencies) lottery winnings and other competition prizes. Warning: You may be liable for Capital Gains Tax in some cases. What about assets I own with another person? If you have a share in a non-exempt asset, for example a house, your trustee can sell your share. If the co-owner is not also bankrupt, the trustee may agree to sell your share to them, but it would have to be for at least as much as the trustee could get from selling it on the open market. If an agreement cannot be reached with the other owner, the trustee may apply to the Court for an order to sell the property. What does my trustee do with the money obtained from my assets? Your trustee’s aim is to pay your creditors and his or her own fees and expenses plus the government realisations charge. Your trustee will sell an asset if there will be an expected surplus after selling costs and expenses and any debts owed to a secured creditor are taken out. The balance (surplus) is kept by the trustee for the benefit of your other creditors. Payments to creditors are called dividends. Example: House property                                     $190,000 less secured creditors council/shire rates                  4,000 bank mortgage                    145,000 less costs of sale legal costs                               1,000 advertising                              1,000 agent’s commission               6,000 Surplus                                                    $33,000 Trustee fees and expenses plus the government realisations charge will be paid out of the $33,000 and the balance distributed as dividends to creditors. Can my creditors take my assets? Secured creditors who hold a security over an asset may take and sell the asset if you fall behind in payments. Bankruptcy does not affect the rights of secured creditors. Common examples of secured assets are: a house subject to a mortgage with a bank a motor vehicle subject to a bill of sale goods under hire purchase, chattel mortgage, lease or bill of sale with a finance company assets with creditors secured by government legislation over houses and land, such as council/shire rates and water rates. If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask. a financial counsellor or your trustee. A list of financial counsellors and other advisors is available from ITSA offices (see rear cover) or from ITSAs website http://www.itsa.gov.au. If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back. A secured creditor cannot take an asset back just because you are bankrupt. Your trustee can sell a non-exempt (divisible) asset if it is of value, even if you are paying it off (eg a house). In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment and commission). More information is available in the pamphlet Debts and Creditors: What happens to them if go bankrupt? More information on trustee fees is available in the pamphlet: ITSA Statutory Fees & Charges What about assets I used to own? Trustees will investigate assets you owned in the 5 years before bankruptcy. If they find that you have given away or sold assets for less than their true value, they may recover these assets. Your trustee may also recover any assets that have been transferred for the purpose of defrauding your creditors (including assets transferred more than 5 years before bankruptcy). What happens to my assets when I am discharged from bankruptcy? Your trustee keeps any non-exempt assets which have not been sold before your discharge (end of bankruptcy). Your trustee may have been unable to sell your assets straight away; it may take some years. In limited circumstances, your trustee has a time limit of 6 years after your discharge to deal with assets (other than cash). The 6 year limit only applies to: assets disclosed in your statement of affairs, and assets acquired by you during bankruptcy, where you disclosed them in writing to your trustee within 14 days of you becoming aware of them. The 6 years do not begin until at least the date of your discharge from bankruptcy. Your trustee is able to extend this 6 year time limit by giving you written notice. If all your creditors and trustee’s fees and expenses have been paid in full, any remaining assets will be returned to you. Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.