WHAT DEBTS ARE NOT PROVABLE IN BANKRUPTCY?
01 06 2006
Some debts that are not provable in bankruptcy include:
- unliquidated damages otherwise than by reason of breach of contract, promise or breach of trust are not provable in bankruptcy (eg. where a debtor has been involved in a motor vehicle accident and judgment has not been entered prior to bankruptcy, or there has been no legal acknowledgment of the liability).
- penalties and fines imposed by a Court are not provable in bankruptcy however penalties imposed by the Australian Taxation Office for late payment or late lodgment of returns are provable in bankruptcy.
- creditors' legal costs are not provable in bankruptcy unless they are allowed by a judgment obtained prior to bankruptcy or were allowed as part of the contractual obligation incurred prior to bankruptcy.
- if a debt is not enforceable at law owing to a prohibition contained in a statute, the debt cannot be proved, (eg a debt due to a minor, an unlicensed bookmaker or a debt related to illegal purchases).
- a Student Loan made pursuant to the Student and Youth Assistance Act 1973 and as from 1st July 1998, the Youth Allowance and Austudy Payment Schemes covered by the Social Security Act 1991, is a debt not provable in bankruptcy, pursuant to Section 12ZW of the Act. HECS-HELP, FEE-HELP or OS-HELP debts which arise after 1 January 2005, are not provable in bankruptcy. Consequential Act changes to existing accumulated HECS debts means they can be converted into new accumulated HELP debts. New accumulated HELP debts are not provable from 1 June 2006.