The Law Handbook 2024

374 Section 5: Managing your money • apply directly to the AAT for a review of the decision if the Inspector-General refuses a request to review the decision (s 139ZF). Providing annual income statements to the trustee After the date of bankruptcy, a bankrupt must give the trustee a statement of income (with supporting documents) at the end of each 12-month period. A trustee can file an objection to the bankrupt’s discharge from bankruptcy if the bankrupt fails to provide the statements of income. Failure to pay a contribution: The supervised account regime If a bankrupt fails to pay the whole of their income contribution, or an instalment of their contribution, at or before the time it becomes payable, the trustee may determine that the ‘supervised account regime’ applies to the bankrupt (s 139ZIC Bankruptcy Act). The supervised account regime requires the bankrupt to open an account (the supervised account) into which all of their income must be deposited when it is received. If the bankrupt receives their income by cash (the trustee must consent to this form of income) or cheque, they must deposit it into the supervised account within five days of its receipt (s 139ZIF). In general, a bankrupt who is subject to the supervised account regime must not make withdrawals from the supervised account without the trustee’s consent (s 139ZIG). Accordingly, a bankrupt must reach an agreement with the trustee about the amount that may be withdrawn from the supervised account for living expenses. The effect of bankruptcy on debts After bankruptcy, a bankrupt is released from most ‘provable’ debts. A bankrupt is not released from any ‘non-provable’ debts. Provable debts The term ‘provable’ means that a creditor can lodge a proof of debt or a claim to be paid and then be paid a proportion of the money (if any) raised by the sale of the bankrupt’s property. Most debts for which the bankrupt was liable at the date of bankruptcy are provable in bankruptcy. Provable debts that are not wiped by bankruptcy Some provable debts are not wiped by bankruptcy (s 153(2) Bankruptcy Act). Debt includes liability (s 5). Provable debts that are not wiped by bankruptcy are debts: • incurred by fraud; • under a maintenance agreement order; or • in relation to a bond or to certain other criminal law penalties. Non-provable debts The main categories of debts that are non-provable (and so not wiped by bankruptcy) are: • debts and liabilities incurred after the date of bankruptcy – ‘present or future, certain or contin- gent’ (s 82(1) Bankruptcy Act); • court fines or penalties (s 82(3)); • HELP debts under the Higher Education Support Act 2003 (Cth); • student loans agreed to before a student becomes bankrupt (s 12ZW Student Assistance Act 1973 (Cth); and • unliquidated damages (an amount claimed by a creditor for damages that has not yet been fixed by formal agreement or by the court). Secured debts The trustee’s rights to a secured property are subject to the rights of the secured creditor. A secured creditor keeps its interest in any secured goods or land (property) by way of its security even after bankruptcy. The secured creditor’s right to sell the security property A secured creditor can only force a sale of the property if the debtor is in breach of the contract. Under section 302 of the Bankruptcy Act, any provision in a bill of sale, mortgage, lien , charge or security agreement under the Personal Property Securities Act 2009 (Cth) that provides that a borrower might be in breach of a secured credit contract merely by entering into bankruptcy is void.