Declaring bankruptcy can seem like a scary decision to make and often comes with a lot of uncertainty and misinformation but there are many cases where bankruptcy can give you a positive result. It releases you from debts that have more than likely been weighing you down and causing you a whole lot of stress. One question you may be asking yourself though, is “what happens to my assets?”.
A common concern for peopledeclaring bankruptcy is that someone is going to arrive at their doorstep and start taking away their furniture; the couch, coffee table, television, even the lamp! This however, is extremely rare and almost never happens with pure insolvency. Under the Bankruptcy Act, the bankruptcy trustee has the right to sell your unprotected assets and use the sale proceeds to pay off your debts. The good news is, many household items are classed as protected assets. Items exempted from recovery by the trustee include:
- Necessary household furniture and other personal effects of yours and your children, excluding any luxury items. (Most household items are classed as ‘necessary’).
- Tools of trade up to a certain limit [presently around $3,700.00]
- Life insurance and superannuation policies (subject to certain limits)
- Compensation for a personal injury
- Assets held by you in trust for another person.
There are some things you should be mindful of though. The government doesn’t want personal bankruptcy to be a barrier to you doing your job, they don’t want to take away your mode of transport so they allow you to retain one vehicle or motorbike up to the market value of $7,900.00. If your vehicle(s) are worth more than that amount you may be at risk of losing them.
For more information about declaring personal bankruptcy, contact our debt specialists today.