Debt & Bankruptcy Lawyers › Bankruptcy Trustee & Creditors
Bankruptcy Trustee & Creditor Lawyers — Proving Debts. Recovering Assets. Protecting Rights.
When a debtor becomes bankrupt, a registered bankruptcy trustee takes control of their divisible assets — investigating financial affairs, realising assets, and distributing dividends to creditors in priority order. A debt lawyer advises creditors on proving debts and maximising the return from a bankrupt estate, advises trustees on their powers and obligations, and advises bankrupts on their obligations during the bankruptcy period and on disputing trustee decisions.
⚠ Creditors must file a formal proof of debt to participate in a dividend distribution — missing the trustee's claim deadline means the creditor receives nothing from the bankrupt estate. Get advice on proving your debt.
Trustee & Creditor Matters We Handle
From proving debts to challenging voidable transactions — all trustee and creditor matters.
Proving a Debt in Bankruptcy
A creditor who wishes to participate in a dividend from a bankrupt estate must file a formal proof of debt with the trustee — setting out the nature and amount of the debt, attaching supporting documentation (invoices, loan agreements, judgment certificates), and lodging the proof by the date specified in the trustee's notice to creditors. A lawyer advises creditors on the formal requirements for a proof of debt, gathers the supporting documentation, and lodges the proof on the creditor's behalf to ensure the claim is not rejected for procedural deficiency.
Disputing a Proof of Debt
A bankruptcy trustee can reject a creditor's proof of debt — in whole or in part — if the trustee considers the debt is not properly proven or does not exist. A rejected creditor can appeal the trustee's decision to the Federal Circuit and Family Court. Conversely, a bankrupt can dispute a proof of debt lodged by a creditor — arguing that the debt does not exist or is overstated. A lawyer advises on the grounds for disputing a proof of debt and manages the appeal to the Federal Circuit and Family Court.
Voidable Transaction Claims
A bankruptcy trustee has the power to recover assets transferred by the bankrupt before bankruptcy under the voidable transaction provisions of the Bankruptcy Act 1966. A trustee can set aside transfers at undervalue to related parties within 4 years of bankruptcy (s 120), transfers at undervalue to unrelated parties within 2 years (s 120), and preferences paid to creditors within 6 months (s 122). A lawyer advises trustees on the prospects of voidable transaction claims and manages the recovery action against the transferee or preferred creditor.
Bankrupt Obligations — Managing the Relationship with the Trustee
A bankrupt has ongoing obligations to the trustee during the 3-year bankruptcy period — disclosing all income and assets, providing annual income statements, seeking consent before travelling overseas, and complying with any examination requirement. A lawyer advises bankrupts on their obligations and manages disputes with the trustee — including disputes about income assessments, the characterisation of assets, and the trustee's decision to extend the bankruptcy (by filing an objection to discharge).
Objections to Discharge
A bankruptcy trustee can file an objection to the bankrupt's automatic discharge — extending the bankruptcy from 3 years to 5 or 8 years — on the ground that the bankrupt has failed to comply with their obligations. The most common grounds for objection to discharge are: failure to make income contributions, failure to disclose income or assets, failure to provide information to the trustee, leaving Australia without consent, and failure to provide a statement of affairs. A lawyer advises bankrupts on challenging an objection to discharge filed by the trustee.
Trustee s 77 Examinations
Under s 77 of the Bankruptcy Act 1966, a trustee can summons the bankrupt and other relevant persons (associates, former business partners, related party transferees) to attend a formal examination before the Federal Circuit and Family Court. The examination is conducted under oath and the examiner must answer all questions (subject to privilege). A lawyer advises bankrupts and other examiners on the conduct of a s 77 examination, on the right to claim privilege, and on the preparation required before the examination.
The Legal Framework
Trustee and creditor law — Bankruptcy Act 1966 (Cth), administered by AFSA.
The registered trustee — powers and obligations
A registered trustee in bankruptcy is a private practitioner registered with AFSA who takes control of the bankrupt's estate. The trustee has broad powers under the Bankruptcy Act — to take possession of the bankrupt's property, to realise assets for the benefit of creditors, to investigate the bankrupt's financial affairs, to conduct examinations, and to pursue voidable transaction claims. The trustee owes duties to the bankrupt estate (including all creditors) — not to any individual creditor. A lawyer advises trustees on the exercise of their powers and on compliance with the Act's requirements.
Priority of creditors — s 109 Bankruptcy Act
Section 109 of the Bankruptcy Act 1966 sets out the order in which the proceeds of the bankrupt estate are distributed to creditors. Priority creditors (in order) include: the costs and expenses of the administration (trustee's fees and costs), certain employee entitlements (wages, leave entitlements), and then ordinary unsecured creditors share pari passu (equally) in the remaining funds. Secured creditors (who hold security over specific assets) rank outside the order of priority — they realise their security directly and only participate as unsecured creditors for any shortfall.
Voidable transactions — the look-back periods
The Bankruptcy Act 1966 empowers the trustee to recover assets disposed of by the bankrupt before the bankruptcy. Section 120 allows recovery of undervalue transfers to related parties within 4 years before the date of the bankruptcy (or 2 years for unrelated parties). Section 121 allows recovery of transfers made to defeat creditors (no time limit). Section 122 allows recovery of preferences paid to creditors within 6 months. A trustee who identifies a potential voidable transaction claim commences proceedings in the Federal Circuit and Family Court to recover the asset or its value.
After-acquired property — assets received during bankruptcy
Property acquired by the bankrupt after the date of bankruptcy (but before discharge) also vests in the trustee — with limited exceptions for protected assets. This means gifts, inheritances, compensation payments, and lottery winnings received during the bankruptcy period vest in the trustee (subject to the exemption for personal injury compensation). A lawyer advises bankrupts on the disclosure obligations for after-acquired property and on the implications of any significant receipt during the bankruptcy period for the trustee's realisation of the estate.
Income contributions — assessment and dispute
The trustee assesses the bankrupt's income contribution liability annually — calculating the bankrupt's income from all sources and determining the contribution payable (50 cents in the dollar of income above the threshold). A bankrupt who disagrees with the trustee's income assessment can object to the assessment within 60 days — requiring the trustee to review the assessment. If the trustee confirms the assessment, the bankrupt can apply to AFSA's Inspector-General for review. A lawyer advises bankrupts on disputing income assessments and on what income is included in the calculation.
AFSA Inspector-General — oversight of trustees
AFSA's Inspector-General in Bankruptcy has powers to investigate complaints about the conduct of registered trustees. A bankrupt or creditor who has a complaint about a trustee's conduct — including failure to realise an asset, refusal to admit a proof of debt, or improper charging of fees — can complain to the Inspector-General. The Inspector-General can investigate the complaint, issue directions to the trustee, and in serious cases refer the matter to AFSA for disciplinary action. A lawyer advises on the grounds for a complaint to the Inspector-General and manages the complaint process.
How It Works
One request. Free trustee & creditor advice.
Tell us whether you are a creditor (proving a debt), a bankrupt (managing obligations), or a third party (facing voidable transaction claims). A bankruptcy lawyer will advise on your rights and obligations.
Submit Your RequestDescribe the matter
Whether you are a creditor, bankrupt, or third party; the nature of the issue (proof of debt, income contribution dispute, objection to discharge, voidable transaction claim); and the relevant deadlines.
Matched to a bankruptcy lawyer
Matched to a bankruptcy lawyer with experience in the Bankruptcy Act's trustee and creditor provisions — who knows the Federal Circuit and Family Court process and AFSA's regulatory framework.
Free consultation
A bankruptcy lawyer contacts you for a free consultation — advising on your rights and obligations, the prospects of any claim or defence, and the steps required to protect your interests in the bankruptcy.