After-acquired property is so called because it is property that is acquired by a bankrupt after the date of the commencement of their bankruptcy. Under section 58(1)(b) of the Bankruptcy Act 1966 (Cth) after-acquired property of the bankrupt vests in the trustee of the bankrupt’s estate, as soon as it is acquired by, or devolves on, the bankrupt. Property under section 5 of the Bankruptcy Act 1966 (1966) is defined to mean “real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property”.
Some examples of property under section 58(1)(b) include:
- Assets received under a will during the term of bankruptcy;
- Lottery winnings (gambling winnings); and
- Gifts of significant value (of which the trustee would have an interest in recovering).
This is not an exhaustive list, however these are common examples.
Pursuant to section 58(6) of the Bankruptcy Act 1966 (Cth), after-acquired property vests in the trustee in bankruptcy and is divisible amongst the creditors of a bankrupt. This means that the trustee of the bankrupt’s estate can exercise all powers in the respect of the property as would have been exercised by a bankrupt for their own benefit, to meet the demands of creditors. Not all property is divisible among creditors and the scope is outlined in section 116 of the Bankruptcy Act 1966 (Cth).
Some examples of property that doesn’t vest in the trustee are:
- Property that is held on trust for others;
- Household property;
- Personal property that has sentimental value, property exempt due to a special resolution of creditors (before a trustee realises the property) and so described in Bankruptcy Regulations 1966 (Cth);
- Property used to transport up to a limit prescribed by the Bankruptcy Regulations 1966 (Cth);
- Property used to earn your income up to a limit prescribed by the Bankruptcy Regulations 1966 (Cth); and
- Life insurance policies, superannuation policies and approved deposit funds.
After-acquired property in relation to a bankrupt, means property that is acquired by a bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt (section 58 of the Bankruptcy Act 1966 (Cth)). After-acquired property in general is property acquired by a debtor after he/she has entered into an agreement where other property is put up as security for a loan.