The Bankruptcy Act 1966 provisions allow and encourage a person to continue earning an income throughout their bankruptcy period.
A bankrupt must make contributions toward their bankrupt estate if their income exceeds the statutory contribution threshold, depending on their family circumstances.
Income under the Bankruptcy Act extends beyond the ordinary meaning of income under the Taxation Acts. Examples include loans received by the bankrupt, items under the fringe benefits tax provisions, annuities, and pensions.
The Bankruptcy Act allows a bankruptcy trustee to reduce a bankrupt’s contribution if they are satisfied the contribution would result in financial hardship, by increasing the threshold amount. Factors include (other than applying for hardship in writing):
- The bankrupt or a dependant suffers from an illness or disability requiring ongoing medical attention and medications, which the bankrupt pays a substantial proportion of those costs.
- The bankrupt must pay for child-care costs to enable their continued employment.
- The bankrupt must pay “particularly high” rent for non-public housing when there are no alternatives available.
- The bankrupt incurs substantial expenses travelling to and from work.
- The loss of financial contribution to household costs from someone who lives with the bankrupt.
If you would like to find out more or modify your bankruptcy, contact a lawyer today.