Saving money during bankruptcy

Can I save money during bankruptcy?

Once a person becomes bankrupt that person can save from his or her wages provided the savings remain in the bank account. The critical element is that the savings must remain in the bank account and not be put on deposit or used to buy shares etc. The reason for this is that if the savings change in nature they can be lost to the bankrupt estate as after acquired property.

There is no limit on the amount a person can save in their bank account from wages during bankruptcy.
Being able to save during bankruptcy can provide great benefit enabling the bankrupt person to have financial security, knowing that savings exist for that unexpected car repair bill or to pay rent if the person should fall ill. What is more, money a person has saved in the bank account during bankruptcy is available for that person to spend once discharged from bankruptcy.

It is also not uncommon for persons who are bankrupt to want to turn their life around and to start saving money for their long-term goals. For example, a young couple who had a high credit card debt filed for bankruptcy, returned to living above the poverty line and commenced saving not as much as they were paying in minimum payments on their cards but enough to have $35,000 in the bank when discharged from bankruptcy. They continued saving and were ultimately able to put a deposit on a house. Bankruptcy enabled them to turn their life around.

We trust this blog has assisted you. This blog is provided as general information only and is not advice. If you have any questions pertaining to one of your clients, please give us a call on 1300 060 122 or email hello@understandingbankruptcy.com.au

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