Assets excluded from the reach of a trustee in bankruptcy: welcome to the cheap seats**

Following on from recent posts it is important to remember that not all of a bankrupt’s property automatically vests in a trustee in bankruptcy.

A summary of the types of assets that do not vest in the trustee, and in turn are therefore not divisible amongst creditors, is set out in section 116 of the Bankruptcy Act and includes:

1. property held by the bankrupt in trust for another person;
2. the bankrupt's household property;
3. personal property of the bankrupt that has sentimental value for the bankrupt;
4. the bankrupt's property that is for use by the bankrupt in earning income by personal exertion, within certain limitations;
5. property used by the bankrupt primarily as a means of transport, within certain limitations;
6. policies of life assurance in respect of the life of the bankrupt or the spouse or de facto partner of the bankrupt;
7. certain superannuation payments, including under split orders following a family law property settlement;
8. the rights of the bankrupt to recover damages or compensation for (among other things) personal injury or wrong done to the bankrupt.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Wonder Stuff song ‘Welcome to the cheap seats’.

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