Bankruptcy Rules

Once in bankruptcy, earn what you like but over a certain amount you will have to pay contributions.

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Are You Facing Bankruptcy?

If you are having trouble paying your personal debts, and if you are constantly being harassed by creditors, you should seek professional advice from an accountant, lawyer or a qualified insolvency practitioner.

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Compulsory Contribution Tables.

The Bankruptcy Act contains a number of thresholds and limits that are regularly indexed. The tables below have just been released on 20 September 2019. In essence, a Bankrupt person can keep a car up to the value of $8,000 and tools used to earn income of $3,800.

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Protected Assets and Limits Limit Note Warning
Motor Vehicles $8,000 A bankrupt may keep a vehicle up to this limit. This amount refers to the equity in a vehicle subject to finance.
Tools $3,8000 A bankrupt may keep tools used to earn an income up to this limit. Failure to disclose status as a bankruptcy may result in criminal charges.
Credit Limit $5,812 A bankrupt or debt agreement debtor must disclose their bankrupt or debtor status when seeking any credit or finance above this limit.
Bankruptcy Notice $5,000 This is the minimum amount upon which a bankruptcy notice can be issued. Below this, a creditor cannot apply for bankruptcy of a debtor. Not an indexed amount.

Liquidation need not be a traumatic experience. If you are considering liquidation, talk to us. We’ll provide honest and direct advice and information about your situation at no cost and without obligation.

Income Contributions

During the period of bankruptcy (normally 3 years until automatic discharge (unless release from bankruptcy is objected to by the Trustee)) there are no limits on the amount a bankrupt person may earn.

However, once a bankrupt person earns more than the statutory amounts, they are required to pay Income Contributions to their Bankrupt Estate. These payments only continue during the bankruptcy period.

Income Contributions Limit
Below these amounts, based on number of dependents, a bankrupt will not have to pay income contributions. Above these amounts, contributions must be paid.
Number of Dependents (after tax amounts)
0 $58,331.00
1 $68,830.58
2 $74,080.37
3 $76,996.92
4 $78,163.54
Over 4 $79,330.16
Amounts are updated 20 March and 20 September each year

Part IX Debt Agreements & Part X Personal Insolvency Agreements

If your debts and income are below the amounts detailed, you may be eligible to undertake a Part IX Debt Agreement. Above these amounts, a Part X Personal Insolvency Agreement may be appropriate.

Eligibility for Part IX Debt Agreement or Part X Personal Insolvency Agreement Limit
Unsecured Debts
If unsecured debts are below this limit, a Debt Agreement can be proposed. Above, the limit a Personal Insolvency Agreement applies.
$116,662.00
Unsecured Assets
If divisible assets are below this limit, a Debt Agreement can be proposed. Above the limit, a Personal Insolvency Agreement applies.
$233,324.00
Income Level
If income is below this level, a Debt Agreement can be proposed. Above the limit, a Personal Insolvency Agreement applies.
$87,496.50 (net of tax)
Amounts are updated 20 March and 20 September each year

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