What are my limitations when I declare bankruptcy?
There are various consequences that you need to be aware of when you declare bankruptcy. It affects your ability to earn income, your house and even your car. Read below for more on how bankruptcy affects these parts of your life.
Can you earn income if you declare bankruptcy?
A common question we get asked at Australian Bankruptcy Services is whether you can still generate income in Australia if you are bankrupt. Although you are able to technically earn as much money as you want, if your income is above the threshold set by the government you will only be allowed to keep half of your income and will have to pay the other half to your bankruptcy trustee. The threshold ranges from $59 031.70 after tax if you have no dependents to $80 283.11 after tax if you have more than four dependents.
Do I lose my house if I go bankrupt?
It will not always be the case that you lose your family home. If you are able to meet the requirements of your bankruptcy trustee, you will not lose your house. For example, if you co-own your home with a partner and the property is valued at $600 000 and you have a loan against the property for $500 000 then you have $100 000 in equity.
The equity is split 50/50 with your partner. Your trustee will require you to raise the remaining equity – $50 000, from either your partner, family or friend. If you are able to raise this money and make the loan repayments, then you can keep your home. However, you will no longer own the property and it will belong to your partner.
Will I lose my car?
The laws in relation to a motor vehicle is that if you have no more than $8000 in equity, you are able to keep the vehicle. For example, if you have a car valued at $20 000 and you had a loan against the vehicle for $13 000, you have $7000 in equity and can keep the car while making loan repayments.
If you are looking for a registered Bankruptcy Trustee, contact Australian Bankruptcy Services. We are all fully licensed and qualified to help you file for Bankruptcy and oversee the process. Call us on our toll-free hotline – 1800 462 767. We operate 24 hours a day, 7 days a week, so there will always be someone on the other side ready to speak to you.