Things You Should Know Post Bankruptcy
Are a bankrupt’s assets their own?
In recent case Di Cioccio vs. Official Trustee in Bankruptcy, the Federal Court determined that when bankrupts use income earned post-bankruptcy to purchase non-exempt assets, such as shares, during their bankruptcy, the assets will be held as after-acquired property, and as such will vest in their Trustee and made available to their creditors. Basically, if the bankrupt earns in excess of the stated threshold and, after making their compulsory payments to their estate, uses surplus monies to purchase assets such as shares or property, these assets become the goods of their Trustee.
Di Cioccio v. Official Trustee in Bankruptcy
This precedent establishing case decided in appeal considered after acquired income and after-acquired property, with the final outcome contradicting previous case law Re Gilles Ex Parte Official Trustee in Bankruptcy (1993) of De Santis v. Aravanis. Special classes of property were created in these prior cases when a bankrupt used after-acquired earned income to purchase something. Therefore, this property would not vest in Bankruptcy Trustee. Now, however, the court has held that any divisible (at the time bankruptcy commenced) property attained post-bankruptcy vests in the Bankruptcy Trustee.
What happens to the savings of a bankrupt?
In the case of Re Gilles, it was held at the time that any income saved after paying any income contribution liability didn’t vest as an asset acquired after bankruptcy. So, can a bankrupt save his/her income (after complying with any income liabilities) and spend it on expenses but not assets? The recent decision of Di Ciocco v Official Trustee has now determined that such savings now vest in the Bankruptcy Trustee in accordance with Section 134(1)(ma) of Bankruptcy Act 1966.
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