Superannuation in Bankruptcy

Superannuation is a protected asset in bankruptcy.  If you file for bankruptcy, your trustee generally can’t access your super to pay out your creditors.  This makes good sense for the majority of bankrupts given that super will be relied upon to fund retirement.  However I’m sure you can see this poses a way for creditors to be defrauded by someone deliberately making extra super payments or lump sum payments prior to bankruptcy.

Since July 2006, Trustees have been able to void transfers to superannuation.  To void a transaction the trustee must show that:

• The transaction happened;
• The transaction occurred within a specific time period, or while the debtor was insolvent but not yet bankrupt;
• The property would have been distributed to creditors if the transfer hadn’t been made; and
• The main purpose of the transaction was to keep the asset under bankruptcy.

Transfers made to superannuation by third parties on behalf of the debtor might also qualify.

Generally superannuation is safe under bankruptcy; if you haven’t tried to hide assets from creditors you will usually be fine.