VIC Savings from income acquired during Bankruptcy

[Charmaine17]

I’ve been bankrupt for almost 2 years and in that time I’ve saved up around $20k. Am I allowed to give this money as a gift to my dependents or another family member? Or am I allowed to give money as an interest free loan to another family member to use for a business start-up? I will have no financial interest in the business.

 

[Tim W]

You'll need the advice of your trustee before you do anything.
This because if you saved up this money during your bankruptcy,
then it may still be fair game for your creditors.
And of course if you have concealed that money from your trustee so far,
then you may have a bigger problem.

Further, you don't get to call it a gift and just expect it to be so.
Even if you call it a gift, you will need to show your Trustee
that it is not in fact an unsecured loan,
or a capital investment in the new business.
This is almost impossible... if only because the first question you will face
is something like...
"How did you afford to save twenty grand over two years,
out of an income below the threshold amount,
why was it not being applied to your debts, and why should it not be now?"

 

[Charmaine17]

You'll need the advice of your trustee before you do anything.
This because if you saved up this money during your bankruptcy,
then it may still be fair game for your creditors.
And of course if you have concealed that money from your trustee so far,
then you may have a bigger problem.

Further, you don't get to call it a gift and just expect it to be so.
Even if you call it a gift, you will need to show your Trustee
that it is not in fact an unsecured loan,
or a capital investment in the new business.
This is almost impossible... if only because the first question you will face
is something like...
"How did you afford to save twenty grand over two years,
out of an income below the threshold amount,
why was it not being applied to your debts, and why should it not be now?"

Saving money from income during Bankruptcy is allowed and is protected income that the trustee is not entitled to. Because it is simply that, money left over from your income. Only when I go over my income threshold am I legally liable to pay my creditors. It’s super easy to save money when being bankrupt because I don’t actually have to spend hundreds of dollars a fortnight meeting payment arrangements and I now live at home with no expenses other than board.

I have not concealed any money from my trustee. Everything was supplied to them on lodgement of the bankruptcy and I have been in contact with my trustee and they are fully aware I have savings in my bank. They will get back to me in a few days time as to whether I can give that money to family members by way of gifting or by an interest free loan. My trustee has said on a phone call the other day that she doesn’t see any issue with it at all but has to send it higher up so I can receive a formal letter stating that it’s ok.

Afsa are also aware that I’ve been sending money to my kids accounts each week. They said this is ok as well. If they say I can’t gift money to a family members new start-up then I will just apply for a partnership with the family member, I’m legally allowed to put my own acquired income to my own business.

 

[Tim W]

So, long story short, you've already done what I suggest - which is to consult your trustee before acting.
In fact, you're actually already waiting on formal advice from your trustee.
And, you understand about threshold amounts - good. Many don't.
And, you have been candid and made disclosures, as is your obligation. Also good.

What then is your question?

 

[Charmaine17]

So, long story short, you've already done what I suggest - which is to consult your trustee before acting.
In fact, you're actually already waiting on formal advice from your trustee.
And, you understand about threshold amounts - good. Many don't.
And, you have been candid and made disclosures, as is your obligation. Also good.

What then is your question?

My question is, am I allowed to gift money to people without the trustee taking the money. The money will be from my acquired savings during Bankruptcy.