Bankruptcy Advice Australia

Whilst you are an un-discharged bankrupt you cannot purchase any assets regardless of the value. The restriction to purchase or acquire assets whilst bankrupt steams from the principle defined under the Bankruptcy Act known as “after acquired property”.  This principal is set out in Section 116 of the Bankruptcy Act. Typically the following types of assets are caught by the principle of after acquired property in bankruptcy:

• Bequests
• Gifts
• lottery winnings
• inheritance

So if you as an undischarged bankrupt receive cash or property from an inheritance, bequest, gift or lottery winnings, then that cash or property will vest in your Trustee in Bankruptcy and you will be required to give up the cash or property to your Trustee in Bankruptcy.

It is important to note that the money of a bankrupt – ie cash at bank – resulting from income which has been assessed under the statutory income contribution regime – does not fall under the principle of “after acquired property”.  For example if a bankrupt holds cash at bank after being assessed for income statutory income contributions, then that cash at bank does not fall under the definition of “after acquired property” and can be kept by the bankrupt, however, if the bankrupt then purchases an asset (ie a motor vehicle) with that cash then the asset would vest in the Trustee in Bankruptcy under the principle of “after acquired property”.