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Can I Lose My Superannuation In Bankruptcy?

Can I Lose My Superannuation In Bankruptcy?

What Does the Law Say About Your Superannuation When You Are Declared Bankrupt?

The thing is, we get a lot of clients asking us if they can lose their life savings that lie in superannuation. This is a good question and a very valid concern to have as this doesn’t just affect you now, but a lot of variables in the latter part of your life. It also impacts the people around you if you are unable to take care of yourself one day.

Fortunately, the Australian Bankruptcy Act does classify Superannuation as a protected asset and you can be rest assured that in most situations, your super will not be taken into consideration when all assets need to be liquidated and distributed among your creditors.

If you’re struggling and don’t know where to start, contact Andrew today for a free consultation.

There Are Exceptions to Be Aware Of.

If you are unsure of this, let us help you there. We can guide you by having a look at your paperwork and what the law says. We can also search the Federal Government Super Fund database where your investments will be listed and or classified accordingly. This will allow us to advise you on the best way to proceed with your bankruptcy and superannuation.

These exceptions are set in place to prevent people from moving assets around in an unethical manner (specifically paying it into a superannuation for protection purposes), only to move it out again after the bankruptcy process has concluded. This has to be the case as it protects all parties and ensures fairness.

Despite the protected status of your superannuation, be mindful that there are exceptions. It can lose its protection status if:

  1. Your superannuation fund is not held in a regulated fund,
  2. It is not held in an approved deposit fund,
  3. If it is a government / public sector scheme it will those rules and protections are excluded from the definitions of the Bankruptcy Act.
  4. If you withdrew any funds before you entered the Bankruptcy process. This means that if you paid off your house with a lump sum, then the house in question will be considered fair game.
  5. Pensions are different, and they do not enjoy the same level of protections as superannuation. Pensions are seen as an income which changes the definition of its application in a Bankruptcy process. There are scales that determine how much of the pension income can be considered as an asset to during a Bankruptcy process.

Call or Text Andrew (24×7): 0439 844 422 | Free Advice Line: 1300 887 210 | Email:

What Is the Best Course of Action?

Truth be told, this is something that the appointed Trustee, partners like us, or your financial advisor can best advise on. We will give you all your options by laying out what the law says about bankruptcy and superannuation and how you are entitled to certain protections.

Most of our clients stay clear of their superannuation altogether so that no party can lay their hands on it as additional contributions or lump sum withdrawals immediately exposing you to potential losses.

It might seem to be a good idea to draw on your superannuation as opposed to selling your car, home or restructuring debt. We do however always caution clients about this as the consequences in the long term are not always positive.

In the end, it is best to raise as much capital from sources that do not touch your life savings and produce a better chance of getting out of this in a stronger financial position that you would have been when raiding your life savings.

The one thing that an appointed trustee might do is to freeze your superannuation whereby continued contributions to the fund are halted. This can be a good thing due to the fact that your monthly expenses can be channelled towards the elevation of the debt burden the trustee needs to remedy.

The only downside of this is that your savings will grow much slower and there might be some charges and penalties that affect your overall return. It might sound severe, but at least you are not losing all of your savings which makes it a good alternative.

Help With Bankruptcy and Superannuation

There are many things to consider with bankruptcy and superannuation and if you need more information or assistance, please get in touch to discuss your options with no obligation.


  • As a Trustee in Bankruptcy, Ross Thomson is often required to think outside the box. As well as creative thinking, Ross brings compassion to the table.

    For Ross, it’s important to see the people behind the financial problem –not just numbers.

    Ross recently helped a bankrupt client who lives in a retirement village with her seriously ill husband.

    The unit she & her husband live in is not owned by them, but subject to a 20-year lease.

    The money to be repaid by the management was due only at sale, when the client finally left the retirement village.

    Sale of the unit was likely to take several years &, if he did sell the couple’s unit, Ross realised he would be effectively evicting them from their home, without resources or family to help them.

    Ross decided to contact the retirement village management & put a proposal to them that they prepay some of the moneys they would otherwise pay the client.

    The village management considered the proposal & have agreed to prepay some of the moneys otherwise due.

    The client is relieved that she will not be evicted & can now concentrate on helping her husband through his health issues.

    The moneys paid represented about 75% of what would have been available to creditors if they waited two years.

    It is a win for the client and for the creditors.

  • I made an appointment with Andrew after finding him on google. I was nervous and apprehensive about what to expect but he made the process of bankruptcy extremely uncomplicated and stress free, allowing myself the opportunity to get the fresh start I was so desperate for. Thank you Andrew I could not recommend you enough.

  • Making the decision to go bankrupt was not easy however once I had spoken to Andrew i felt all my anxiety disappear. Andrew does not judge you and he has an innate ability to put you at ease. He took care of the whole process for me again reducing the stress involved with completing paperwork.
    Thank you very much.

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    Best of all, he is there for you through your entire bankruptcy period. Get your life back, it's not as bad as you think. Thank you Andrew for lifting the burden and allowing me to move on.

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    Andrew was extremely welcoming and made me feel so comfortable with my decision to proceed immediately.

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  • Andrew was a steadying hand with his advice.Showing that things aren't as bad as first thought nor any obstacle insurmountable. If you have questions needing answers, Andrew is the person to ask. Thanks for your advice Andrew.

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  • Andrew was very knowledgeable, caring, helpful and compassionate when I went and saw him. He made me feel that I wasn’t the loser and failure that I thought I was being. Even down to the box of tissues on the table.. which I needed. Highly recommend to go see Andrew if your struggling. There is life after!

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  • Andrew and his team do an excellent job of helping their clients with bankruptcy advice and it is a pleasure to work with him.

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  • Don't hesitate contacting Andrew, I was stressed, struggled sleeping through debt. Andrew put me at ease. He listened to my situation and we decided on my next move. Andrew is professional and easy to talk too. I would recommend highly to anyone who wants help to give him a call. I appreciate your support Andrew. Regards Brett.

  • Andrew has given me back my life!!! After living paycheck to paycheck, I didn’t know what to do. Until I made the big step and booked an appointment with Andrew. As soon as I left his office I felt a huge weight lifted!!!

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  • Andrew was prompt, organised, friendly and efficient with the processing of my documents and made everything very simple for me so I didn’t need to deal with the added pressure and stress. Thank you Andrew for allowing me to start afresh and getting it done within a matter of weeks.


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