Bankruptcy

Employment and Businesses

Many people are often worried about their employment when it comes to filing for bankruptcy. For a lot of people, employment is not affected, but you should review your employment contract and any other documents outlining the conditions of your employment if you’re concerned about this. If you locate references to bankruptcy or insolvency, then you may need to have a discussion with your employer about whether bankruptcy will have any adverse impact on your role.

As an Employee As an employer

While there is nothing in the Bankruptcy Act that specifically prevents you from working in any particular occupation, there are some professions where bankruptcy may impact your role.

If you’re a builder, real estate agent, accountant or lawyer, you’ll need to undertake research to see how much, if any, of your job will actually be impaired.Employment can be a complex area, but we can advise you on your specific circumstances.

AFSA also provides an overview on their website.

Self-employment is incredibly complex. There are some simple black and white rules – such as the fact that pre-existing partnerships are dissolved, although you can trade under your own name as a sole trader or under a partnership created after the date of bankruptcy.

You’re also unable to act as a director (as per the Corporations Act) or as the trustee of a trust (the assets they are holding in trust as the trustee become assets of the bankrupt estate) when bankrupt.

Running a business can also be impacted by the type of operation you run – if it involves stock or the acquisition of assets, these assets might vest in the trustee. And in terms of borrowing, it’s a criminal offence to not disclose your bankruptcy when obtaining credit over $5.5k (this includes paying for goods and services on credit or cheque) and the same goes for those in Debt Agreements and Personal Insolvency Agreements.

As you can see, it’s not always as straightforward as we’d like.

If you’re using a trading as name as a sole trader or partnership, you must disclose your bankruptcy status to everyone you deal with. You generally don’t need to do this if you’re trading under your own name.

If you’re an employer or business owner, talk to an insolvency expert today on 1300 369 168 or make an online enquiry.

Watch our video on employment and bankruptcy to learn more

Worried about your job and bankruptcy?

Things may not be as Black and White as you think. To discuss your situation with an expert, just call 1300 369 168.

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