Common Questions around Bankruptcy
1. Who can go bankrupt?
Bankruptcy only applies to individuals and not companies. In cases where businesses operate as sole traders or partnerships, only the individual/s can become bankrupt, not the business entity itself.
2. What is bankruptcy?
It’s a legal process where a person is declared bankrupt if they are unable to pay their debts due to creditors and a bankruptcy trustee is appointed to manage the individual’s bankruptcy.
3. Can I earn income whilst I’m a bankrupt?
There is no limit to the amount of income that you can earn while you are a bankrupt, however, if your after tax income exceeds a set amount, you may have to pay contributions from your income to your trustee. This amount changes with the number of dependents you have.
4. Will I lose my job?
Being bankrupt doesn’t normally stop you from working, but there are restrictions to be aware of:
· Some trades and professions restrict you from working if you are a bankrupt; and
· Whilst you are a bankrupt you can’t be a company director or officer.
5. Can I keep my car?
Being a bankrupt doesn’t always stop you from owning a vehicle, however, there are some restrictions. In order to keep your vehicle:
1. The value of the vehicle must be below a set amount;
2. The vehicle is your primary means of transport; and
3. You maintain repayments on your vehicle if it is under finance.
6. Can I keep my house?
That depends on a few factors including:
- How much is owed to the bank;
- Your financial interest in the house; and
- The rights of your partner or co-owner
7. How long does bankruptcy normally last?
The rule is three years and 1 day, however in some cases early discharge may be available.
