Will Bankruptcy Restrict Overseas Travel?
Can Australians travel overseas after declaring bankruptcy? Fortunately, the answer is “yes” – but only if they get permission from their trustee beforehand. In most cases, if you have been meeting the terms of your bankruptcy, there should be a decent chance for you to travel abroad.
However, the process is a little more complicated than just ringing up your trustee and asking for permission. You will have to fill out a Request for Permission to Travel Overseas While Bankrupt form. Details required on the form include:
- Where you got the money to travel with. Usually, if you can prove that you saved for the trip, or that someone else paid for it, you should be good to go.
- Details about your destination and departure/ arrival dates
- A valid reason for needing to travel. For example, for work, for compassionate reasons, or even for a special family holiday.
- Details about compulsory payments to your creditors: will they be paid before you leave?
Reasons why you may be refused permission to travel if you are bankrupt
Bankruptcy is not an easy ride. There are many stipulations that must be adhered to precisely. Failing to do so will raise the likelihood of being refused permission to leave the country. If you need to travel overseas for work and are denied, it can be a career disaster. If you need to see loved ones but are forbidden, it can be an emotional mess.
Three common reasons for denial are:
- You haven’t adhered to your obligations as stipulated under the Bankruptcy Act.
- The bankruptcy investigation is not yet complete, and you need to be there to work with the trustee.
- You part of the Bankruptcy investigation is done, but the trustee has not yet completed their part.
What happens if you leave the country without permission?
People who have filed for bankruptcy cannot leave Australia without the written permission of their bankruptcy trustee. Technically, Section 77 of the Bankruptcy Act requires people who go bankrupt to hand over their passports to their trustee.
Later, the trustee may lodge a Passenger Analysis Clearance and Evaluation (PACE) notice with the Department of Immigration to make sure that the person gone bankrupt cannot leave the country without written consent.
If the trustee fails to lodge the PACE notice, some bankrupts might try to skip out for a few days. If they can figure out a way to get past the lack of passport, they are still in for a harsh surprise: even the act of trying to leave Australia without the written consent of your trustee is an offence under the Bankruptcy Act, leading to a maximum of three years in prison.
Don’t let it come to sirens blaring as you try to check in for a quick jaunt out of town – it’s not worth the shame, not to mention the prison time!
According to AFSA, if you leave before, during or after your bankruptcy without your trustee’s written consent, the trustee has the right to lodge an objection and extend your period of bankruptcy to five years from the date you return.
Even bankrupt Rugby legends get busted for overseas travel
In early August 2016, ABC news reported that former rugby league star Jarrod McCracken was referred to authorities for allegedly travelling overseas while bankrupt.
The rugby hero declared bankruptcy in 2013, saddled with with $20 million in property-related debts. According to his trustee Nick Crouch, he reported Mr. McCracken to the Australian Financial Security Authority for travelling overseas to Bali without his consent.
As you can see, even celebrities and once-powerful business tycoons are not immune from overseas travel stipulations while bankrupt.
The bottom line on traveling overseas for bankrupt Australians
If you apply to travel overseas, generally, expect the answer to be “no”. The simple logic is that if you can afford to travel overseas, why can’t you afford to pay your creditors?
However, there are always exceptions. Under the Bankruptcy Act, overseas travel must be approved by the Bankruptcy Trustee assigned to manage your case.
The decision on whether or not to grant bankrupt Australians permission to travel is solely at the discretion of the Bankruptcy Trustee. Even if there is a family tragedy or you have to go on an important business trip, the bankruptcy trustee can refuse. Their decision is binding, although appeals are possible through the Administrative Appeals Tribunal.