WA Registered Trustee Entering Bankrupt's Home - Conduct Questionable?

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Keziah

Well-Known Member
27 September 2014
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What is the legal procedure for a registered bankruptcy trustee to enter into a bankrupt's home and inspect throughout the home? Are they required to give reasonable notice, and what would be considered 'reasonable notice'?
 

Sarah J

Well-Known Member
16 July 2014
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Melbourne, Victoria
Is the trustee court appointed trustee in bankruptcy?

Under general principles, once a person is declared bankrupt and a trustee in bankruptcy has been appointed by the court, that person will then act for the creditors and all divisible property (property that can be taken by the trustee) belongs to the trustee for the benefit of the creditors. Therefore, the trustee can enter property, seize property and deal with property as they please with or without notice.

The trustee should have explained their rights and responsibilities and your responsibilities at the time of appointment: Bankruptcy guide Federal Court of Australia.

A family home can be part of the divisible property, along with home contents that are not necessary household items. See "what happens to the bankrupt's property" for a breakdown of what is divisible and what is non-divisible property.
 

Keziah

Well-Known Member
27 September 2014
21
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126
No, not appointed by court. Appointed 3.5 months into bankruptcy by creditor with agenda. Rented home. Insistent on half hours notice to mother home alone with sick child home from school. Somewhere it is stated trustee has to give reasonable notice. Child heard 2 hour interrogation & witnessed mother being emotionally torn apart, then surprise house inspection. Is that normal conduct?
 

Sarah J

Well-Known Member
16 July 2014
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Melbourne, Victoria
Hi Keziah,

I am guessing that a creditor applied to the court for a sequestration (bankruptcy) order? And that this was not a voluntary bankruptcy petition? In this case, the creditor may appoint a trustee.

The trustee will generally not be coming into your house unless they need to search for something or do a content valuation or seek account books. The trustee should give you reasonable notice before their visit. However, I am unsure whether this is mandated by law or whether this is just good industry practice.

Trustees are generally governed by the Bankruptcy Act 1966 (Cth). However, going through this legislation, I cannot find any provision that requires notice to be given by the trustee. The nearest provision I found is s 77AA - access to premises which allows the trustee to enter premises "at all reasonable times".

I suggest speaking with the Financial Ombudsman Services in relation to the notice and the conduct of the trustees in bankruptcy. Further, I suggest speaking with your local legal community centre in relation to whether the creditor followed proper procedure in terms of petitioning court for the sequestration order and in giving your notice and in appointing their own trustee.
 

Keziah

Well-Known Member
27 September 2014
21
0
126
Thankyou very much for that. It was a voluntary bankruptcy & it was NOT a reasonable time to 'visit'. Your advice and time spent is very much appreciated.
 

Keziah

Well-Known Member
27 September 2014
21
0
126
If this was a voluntary bankruptcy, from your comment, does a creditor have the right to appoint a private trustee? Where would I find this information written.
Also, if the bankrupt had an unresolved counter-claim against this creditor, and the creditor paid a large sum of money up-front to the trustee, who then dismisses the counter-claim without being presented all the facts, is this conflict of interest?
 

Sarah J

Well-Known Member
16 July 2014
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Melbourne, Victoria
A trustee acts in the interests of the creditor and not the bankrupt. creditor appointed trustee will most likely act in the interests of that creditor. Hence, I strongly suggest you get your own legal advise before paying over the money to the trustee and forfeiting your counter-claim. If you have already done this, you may seek the counter-claimed damages as a separate action initiated by you.

Generally, a voluntary bankrupt the court will appoint someone from the Australian Financial Security Authority.

The following pages may be of some guidance to you:

- Federal Court of Australia: Bankruptcy guide.
- Creditor's petition checklist.
- Lodging a complaint against the trustee. (I suggest taking a look at this).
- The Law Handbook: Bankruptcy.
 

Keziah

Well-Known Member
27 September 2014
21
0
126
Thankyou Sarah. I was with AFSA for 3.5 months & then creditor hired trustee & 'set him upon us'.
Best regards.
 

Keziah

Well-Known Member
27 September 2014
21
0
126
Does a registered trustee 'own' the shares of the bankrupt's company if the company is owned by a family trust ?
 

Sarah J

Well-Known Member
16 July 2014
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Melbourne, Victoria
No, if the company is owned by a family trust, the trust should not go to the trustee in bankrupt. This is because the debtor (person who is bankrupt) is not the beneficiary of the trust.