- 1The trustee deals with your interest in the property, not a co-owner's share.
- 2Equity matters: a property with little or no equity may be of limited value to the trustee.
- 3Alternatives to bankruptcy may help protect a home — get advice before any step is taken.
What the trustee can do
On bankruptcy, a trustee — the Official Trustee or a registered private trustee — takes control of your divisible property for the benefit of creditors. A house you own, or your share of one, forms part of that property.
The trustee will consider the equity after any mortgage. Where there is equity, the trustee may seek to realise it, which can include selling the property.
Jointly owned homes
If you own the home with a partner or family member, the trustee steps into your share only. The co-owner keeps their own share, but a sale can still occur if the trustee's interest cannot be resolved another way.
A common solution is for the co-owner or a family member to buy the trustee's interest at an agreed value, allowing the family to remain in the home.
What is generally protected
- ✓Most superannuation held in a regulated fund.
- ✓Ordinary household furniture and personal items, within limits.
- ✓Tools of trade and a vehicle, up to set value limits.
- ✓Certain compensation payments.
Value limits are set and indexed, so the specific amounts should be confirmed with AFSA or your adviser.
Options before bankruptcy
If protecting your home is a priority, it is important to get advice before bankruptcy. A debt agreement or personal insolvency agreement may allow you to deal with creditors while keeping the property, depending on your circumstances and your creditors' support.
Common questions
How long does bankruptcy last?+
Bankruptcy generally lasts three years from the date your statement of affairs is accepted, although it can be extended in some circumstances.
Can my partner lose their share of our home?+
Your trustee deals with your interest only. A partner's share is not part of your bankrupt estate, but a sale may still affect them if your interest is realised.
Sources & further reading
- ↗Australian Financial Security Authority (AFSA) — bankruptcy, trustees and protected assets
- ↗Federal Register of Legislation — Bankruptcy Act 1966 (Cth)
This guide is general information about Queensland and Australian law and is not legal advice. Laws change and every situation is different — speak with us about your specific circumstances before acting.
