The Limitations of Bankruptcy
Bankruptcy involves a number of limits, thresholds and amounts which can restrict your assets, income and way of life during bankruptcy. These limits are regularly indexed and can change in line with the Consumer Price index or the base pension rate.
When you declare bankruptcy, you must comply with these limits for bankruptcy period. Yout Bankruptcy Trustee will provide more information about what you may keep. Any assets to be found over the limit may be sold and the profits will be distributed to your creditors.
Tools of Trade
Many professions and trades require you to bring your own tools. During Bankruptcy, you may own tools used to earn an income up to the set limit.
You may keep a vehicle (car or motorbike) during bankruptcy. The vehicle must be used mainly for transport and be worth less than the limit. This means, if you own the vehicle outright it’s resale value must be less than the limit. If the vehicle is under finance, the equity must be less than the limit. You can find the equity by subtracting the value of the car from what you currently owe.
In certain circumstances, you are able to apply to receive a line of credit. This could include store credit, hire purchase and leasing. If you intend on obtaining credit above this limit, you must disclose you are bankrupt. Please be aware, in certain circumstances, it is a criminal offence to apply for credit while bankrupt. You should always check with your Trustee before applying for a line of credit.
Base Income Threshold
There is no limit on the amount of money you can earn while bankrupt. However, every dollar earned more than the limit will be garnished. Fifty cents of every dollar earned more than the limit will be credited at tax time and distributed to your creditors.
Income Thresholds with Dependants
Income thresholds change according to how many dependants are in your care.