Bankruptcy Protected Property

There are certain assets which are protected under bankruptcy. These asset are protected from you creditors and can not be seized or sold.

The entity that would reposes your property under bankruptcy is a Trustee. The Trustee allocated to your file is NOT TRYING TO PUNISH YOU! The Trustee will only possess something if it will be worthwhile taking and selling. After the property taken and sold the Trustee needs to paid for their time taking, selling and giving the proceeds to creditors. Therefore it needs to be a sizable asset for the Trustee to bother. Remember that in bankruptcy assets are valued on “fire sale” value. What would you get for it if you had to sell it at “cash converters” tomorrow?

  • Most household or personal items
    • Fridge, freezer, washing machine, couch, TV, bed, furniture, crockery, cutlery, mower. Unless you have some serious antiques or paintings on your wall your household possessions are safe.
  • Tools used to earn an income
    • If you need equipment to make a living it would be unreasonable for Trustees to take it and deprive you of your income. However there is a limit to this. The limit is increased every year and can be found here. Remember it’s a fire sale value NOT what you paid for them.
  • Cars and motorbikes
    • Your method of transportation is protected within reason. Cars are protected up to a certain wholesale value, which generally translates to about 50% of the retail price. The current limit can be found here.
  • Superannuation funds
    • The government doesn’t want to pay you the pension so your super is protected. However don’t think that you can put money into your super to deceive creditors. Any extra money put into your Superannuation before you got into trouble is fine.
  • Life insurance
    • Most people don’t have these anymore but if there’s a savings component to your life insurance policy it’s safe.
  • Compensation for a personal injury
    • If you’ve received compensation for any injury the money is protected as is anything you bought with it.
  • An asset held buy you in trust for someone else
    • A trustee isn’t going to take you kids savings account or Grandma’s savings account they’re all protected.
  • Awards of a cultural, academic or military nature
    • Any awards will not be taken.