Let’s delve into the topic of bankruptcy and how it affects the income of an individual.

In the context of bankruptcy, the general rule is that a bankrupt is allowed to keep their income, provided they meet the income threshold and pay the necessary contributions to their bankrupt estate. After these contributions have been paid, the bankrupt is left with a certain amount of income that is typically kept in a savings account in their name.

What can and can’t the bankrupt do with this income?

If the bankrupt chooses to purchase assets that can be taken control of by a bankruptcy trustee, these newly acquired assets will be classed as after-acquired property, which ultimately falls under the control of the bankruptcy trustee. This means that the bankrupt will immediately lose the asset. This applies to assets such as real estate, shares, investments and cryptocurrencies.

Now, if the insolvent utilises their funds to acquire possessions that are not under the jurisdiction of the insolvency trustee, for example, a motor vehicle up to a value of around $8,100 at present, they can maintain that during bankruptcy as a vehicle of this amount would usually be allowed to be held by a bankrupt during bankruptcy. What if they simply leave it as savings in their bank account? That is absolutely acceptable as well. But the instant they convert it into an asset of the kind that typically goes to the insolvency estate, they will forfeit the asset.