I’m Bankrupt! Will this affect my employment and income?
So you’ve become bankrupt, either by your own volition or that of a creditor and now your assets are in the hands of the Trustee in Bankruptcy (‘the Trustee’). But what does this mean for your employment and income?
Although bankruptcy in itself does not stop you from working, it may (likely) have an impact on your income and employment opportunities. The Australian Financial Security Authority will not inform your current employer that you are bankrupt. However, this does not prevent current or potential employers from asking if you are bankrupt or conducting a National Personal Insolvency Index search.
The Bankruptcy legislation does not impose restrictions on employment. However, particular industries associations and licensing authorities impose some restrictions that you ought to be aware of, such as:
- You cannot manage a trust account (eg, as a solicitor or accountant);
- Some professional or licensing bodies impose restrictions in some trades and professions;
- You cannot be a director of a company or manage a company without first obtaining permission of the court; and
- There may be limitations to operating as a sole trader. For example, if your business name does not contain your full name, then you must inform people you do business with that you are bankrupt.
As the Trustee has control over your assets during the bankruptcy process, you have an obligation to inform the Trustee of any changes to your income and/or employment such as changing jobs, receiving a higher or lower income or that you’ve stopped working.
Although there is no limit to how much you can earn whilst you are bankrupt, if your after-tax income exceeds a set amount, you may be required to make compulsory payments depending on your dependants.
The income contribution thresholds are updated twice a year on 20 March and 20 September. Currently, the Base Income Threshold Amount with no dependants is $57,866.90. These contributions are used to assist in repaying your debt. The Trustee will notify you when you are required to make payments.
There is also no limit to how much you can save during bankruptcy. However, the funds in your account on the date of bankruptcy form part of the assets that are seized by the Trustee.
If you require further information regarding the consequences of bankruptcy or guidance around the bankruptcy process, please contact one of our friendly staff at Bambrick Legal today.