I’m Bankrupt – I Need a Holiday!

There is a common misconception that by going bankrupt you cannot travel overseas.

This is not the case, and whilst doing a runner like Christopher Skase will get you into trouble, there is a procedure in place that allows bankrupts to travel.

You must seek the permission of your Trustee to travel. This permission should be a written request and include the following:

• The reasons for travel and where you’re going
• The intended departure and return dates
• Contact details including email address, phone number and an overseas address where your trustee can contact you
• Your income details and what arrangements are in place to meet any compulsory income contributions due whilst you are away
• Who is paying for the trip, including a letter from that person if it is not you
• Employer evidence if you are travelling for work

Adequate time and information should be provided to your trustee to consider your request. Often bankrupts are required to travel to promote income earning activities.

If asked by your trustee to provide your passport, you must comply with this direction.

Your request to travel may be refused if:

• You have failed to comply with your obligations under the Bankruptcy Act (usually failure to comply with paying income contributions)
• The trustee requires your assistance to administer your estate (i.e. unresolved matters)
• The trustee has not completed his investigations into the bankrupt estate
• There is a reason to suspect that the bankrupt will fail to return to Australia.

It is an offence to:

• Leave Australia without the written permission of your trustee (penalty can be up to three years imprisonment)
• Leave with permission but fail to return by the stipulated date
• Breach any travel conditions imposed by your trustee (penalty can be up to one year imprisonment)

 (The above can also result in your trustee lodging an objection to your discharge extending your bankruptcy for five years from your return date to Australia)

 The bankrupt has the ability to try and resolve any refusal to travel with his trustee in the first instance, failing which the bankrupt has the ability to apply to the Federal Court to have the decision reviewed.

The restrictions that apply to a bankrupt do not apply to a debtor who has entered a Part X – Personal Insolvency Agreement.

Quite simply, prompt and detailed communication with your trustee together with complying with your obligations pursuant to the Bankruptcy Act will enable a bankrupt to continue to travel, often at the dismay of their creditors.