Superannuation and Financial Recovery

Eric filed for bankruptcy to clear his credit card debt and then retired. Eric owns a house jointly with his wife, Jill. The house is worth $650,000 and the mortgage is $520,000. Eric and his wife own a caravan worth $63,000 with $23,000 owing on the hire purchase contract. Eric’s car is worth $40,000 with a lease payout of $42,000. Eric is at retirement age, owes a total of $185,000 spread over multiple credit cards and due to a medical condition, his doctor has recommended that he retire asap. Eric has superannuation of $150,000 and Jill has superannuation of $350,000 plus savings of $60,000.

Eric’s assets are:

  • Share of equity in the family home: $65,000.
  • Share of equity in a caravan: $20,000.

Eric’s liabilities are:

  • Lease payout on car: $42,000.
  • Credit card debt: $185,000.

Eric wants to retain his home, car, and caravan so he and Jill can continue their lifestyle in retirement.

Eric does not have the money to pay out his credit card debt or vehicle lease.

Eric & Jill’s Solution: Eric retired and then filed for bankruptcy to clear his credit card debt. Eric then liaised with his licensed financial advisor and was able to access his superannuation of $150,000 as a lump sum. These monies and any assets purchased with these monies are protected for Eric and are not available to his bankrupt estate. Eric then communicated with his Bankruptcy Trustee and agreed to pay $85,000 to his bankrupt estate for the release of its interest in his family home and caravan. Eric then paid out the lease on his car for $42,000 and the debt on his caravan for $23,000. Eric’s lump sum has been totally consumed to save the house, car, and caravan.  Eric’s wife, Jill is 6 years from retirement. The mortgage remaining on the family home is $520,000 and Jill desperately does not want to lose the family home. She has superannuation of $350,000 and savings of $60,000, total $410,000. Eric is talking to his licensed financial advisor about him obtaining the pension. Jill is talking to her licensed financial advisor about whether she can make extra tax-deductible savings to her superannuation. Jill’s aim is to save and then pay down the family home mortgage when she retires. Jill is seeking for her and Eric to own their home and receive a pension. Jill’s Accountant is talking to her and Eric about relocating to a less expensive home.

Tom and Joan are at retirement age and are concerned that they cannot afford to retire due to Tom having $78,000 and Jill’s $63,000 in credit card debt. Tom & Joan rent, Tom’s car is worth $20,000 and Joan’s car $6,000. Tom has super of $42,000 and Jill has $29,000. Tom & Joan’s retirement dream was to sell up, buy a caravan and travel around Australia.

Tom & Joan’s Solution: Tom and Joan filed for bankruptcy to clear their credit card debts and then retired. Tom and Joan then liaised with their licensed financial advisor for them to each access their super funds as a lump sum. Tom then liaised with his Bankruptcy Trustee and paid the excess value of his car above the bankruptcy threshold amount to his bankrupt estate of $11,850. Tom and Joan then sold their household furniture and effects and received $5,250. After buying the bankrupt estate’s interest in Tom’s car, combined Tom and Joan had $59,150 to buy a caravan and $5,250 in the bank. Their licensed financial advisor helped them to obtain the pension and they commenced their new life travelling around Australia.

Barry and Sally are at retirement age and are wanting to retire. They jointly own a duplex property worth $480,000. The mortgage owing on the property is $420,000. Barry\’s car is worth $6,000 and Sally\’s car is worth $7,000. Barry has superannuation of $170,000 and Sally has superannuation of $60,000. Sally has credit card debt of $92,000. Barry and Sally are concerned that they cannot afford to retire due to Sally\’s credit card debt. They are not wanting to save their duplex property as they have decided that they cannot afford to keep the property. They would love to retire on the pension and be able to keep their superannuation funds.

Barry & Sally’s Solution: Sally files for bankruptcy to clear her credit card debt and Barry and Sally retire. Barry and Sally talk to Sally’s Bankruptcy Trustee and work with the Trustee for the duplex to be sold for as much money as possible. The duplex is sold and generates equity of $80,000 of which $40,000 goes to Sally\’s bankrupt estate and $40,000 is paid to Barry. For retirement, Barry has his super of $170,000 and $40,000 from the sale of the duplex while Sally has her super of $60,000 and is debt-free. Barry and Sally talk to a licensed investment advisor re them accessing the pension and how they will access their superannuation funds to support their retirement.

John is eight years from retirement, divorced and his company has gone into liquidation. John has $450,000 in superannuation and nominal other assets (they went in his divorce). John has personal guarantee creditors totaling $760,000 from his failed company. John is concerned that he does not have time to financially recover and pay off a mortgage before he reaches retirement age.

John\’s solution: John was able to source a job earning $150,000, utilising the skills he developed whilst running his own business. John filed for bankruptcy to clear his personal guarantee debt and also protect him from any insolvent trading claim the liquidator may take against him in the future. John\’s financial recovery plan was to continue renting and to work with his licensed financial advisor for him to be able to save $50,000 per year to his superannuation fund by utilising his employer’s SGC payments and voluntary contributions. John\’s aim is to have $850,000 in super plus returns generated by his super fund by the time he retires. This will enable him to buy outright a small unit and, with the assistance of his licensed financial advisor, obtain the pension and live comfortably in retirement.


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