Superannuation in Bankruptcy
Superannuation is a protected asset in bankruptcy. If you file for bankruptcy, your trustee generally can’t access your superannuation to pay out your creditors. This makes good sense for the majority of bankrupts, given that superannuations will be relied upon to fund retirement. However, I’m sure you can see this poses a way for creditors to be defrauded by someone deliberately as debtors make extra superannuation payments or other lump sum payments prior to bankruptcy.
Since July 2006, trustees have been able to void transfers to superannuation.
To void a transaction, the trustee must show that:
- The transaction happened
- The transaction occurred within a specific time period or while the debtor was insolvent but not yet bankrupt
- The property would have been distributed to creditors if the transfer hadn’t been made
- The main purpose of the transaction was to keep the asset under bankruptcy
Transfers made to superannuation by third parties on behalf of the debtor might also qualify.
Generally, superannuation is safe under bankruptcy; if you haven’t tried to hide assets from creditors, then you will generally be fine.
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