What happens to cash at bank in bankruptcy?

There is often confusion among bankrupts about what they can and cannot keep once they have become a bankrupt. So much so that there are certain myths surrounding bankruptcy.

One of the questions we most often get asked is “what happens to my cash at bank?”.

In this article, we will first explain what a bankruptcy is, what happens after an individual goes bankrupt, and finally what happens to monies in a bank.

What is a bankruptcy?

Bankruptcy is a process in which an individual is formally declared unable to pay their debts. Simply put, the individual’s liabilities have exceeded their assets.

An individual can become a bankrupt by either:

  • Filing a debtor’s petition; or
  • By an Order of Court obtained by a creditor.

What happens in a bankruptcy?

Once a person is declared a bankrupt, the individual will be released from all provable debts. A bankruptcy trustee will be appointed to collect and sell all divisible property of the bankrupt. Divisible property includes:

  • Real property (land, house, etc.);
  • Motor vehicles above a certain value; and
  • Investments such as shares and cryptocurrencies.

Funds in your superannuation are generally not be divisible property. There are of course, exceptions to this.

What about my cash at bank?

Strictly speaking, all cash of a bankrupt is divisible property. There are no provisions in the Bankruptcy Act that allow for a bankrupt to keep any cash. Some Trustees will collect all monies of the bankrupt, including all cash at bank.

At Pearce & Heers, we will usually allow a bankrupt to retain an amount enough to meet their day-to-day expenses. How much this amount is would depend on individual circumstances. As a general rule however, we allow a bankrupt to retain around $2,000 to meet their daily expenditures. Only in very exceptional circumstances would a bankrupt be allowed to retain more than $2,000.

Contact us for assistance

If you have questions in respect of bankruptcy or would simply like to discuss the contents of this article, contact us at our Brisbane or Gold Coast offices. We may also discuss the options that are available to you to avoid bankruptcy.


We’re happy to answer any questions you may have, so please don’t hesitate to call us and schedule a consultation.



Level 12
127 Creek Street
Brisbane Qld 4000


Phone: 07 3221 0055
Fax: 07 3221 8885

Postal Address

GPO Box 691
Brisbane Qld 4001




Level 15, Corporate Centre One
2 Corporate Court
Bundall Qld 4217


Phone: 07 5630 1179
Fax: 07 3221 8885