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Ask Deborah Awyzio Your Own Question
Deborah Awyzio
Deborah Awyzio, Solicitor
Category: Australia Law
Satisfied Customers: 863
Experience:  Bachelor of Laws (QUT), BIT (QUT), Family Law Accredited Specialist, over 12 years experience
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I became bankrupt in June this year and three months later

Customer Question

I became bankrupt in June this year and three months later received a lump sum payment of my super for permanent incapacity benefit it is a lump sum payment not an annuity a pension or an income stream
My bankruptcy trustee has advised me that I cannot spend my payment until they decide if they can take the money for the creditors
My understanding is that a lump sum payment made by a regulated super fund on or after the date of bankruptcy is quarantined form creditors I have only made compulsory contributions throughout the lifetime of the fund so the clawback regulations do not apply
Is my payment safe from the creditors and if so why have they prevented me from touching it until they decide
Submitted: 1 year ago.
Category: Australia Law
Expert:  Leon replied 1 year ago.

Good Evening

My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. Please understand this is not legal advise Please understand this is not legal advise but a guide to assist you.

They are correct.

While it is in the fund the trustee in bankruptcy cannot touch it. Once it leaves the Superfund and it is in your possession they can take it.

Here is some information from AFSA

Customer: replied 1 year ago.
In the afsa link you gave me it states that money obtained as an early lump sum payment release (mine for permanent incapacity benefit) if it is obtained on or offer the date of bankruptcy it is quarantined from the creditors and trustee therefore that would say to me that it cannot be touched by the trustee
Expert:  Leon replied 1 year ago.

Good Evening

You have to use that argument.

The issue is when did you apply for it to be released and when was it approved for release. This will affect the payment.

Customer: replied 1 year ago.
I applied for it a few months after I became bankrupt and received it in september
Expert:  Leon replied 1 year ago.

In that case you have a strong argument to keep the money.

You should get together the documentation to back your position.