What is Bankruptcy

Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.

Bankruptcy may affect your income, employment and business

If you earn over a set amount, you may need to make compulsory payments to your trustee. There may also be some restrictions on your employment and running a business.

How does bankruptcy affect my income and employment

Becoming bankrupt doesn't normally prevent you from working, but it could have an impact on your income and employment. This page helps you to understand how it could affect you.   

One of your obligations when bankrupt is to keep your trustee informed of any changes in your income or employment. For example, if you:

·       Change jobs

·       Receive higher or lower income (including government assistance)

·       Stop working.

How much can I earn

There is no limit to the amount of income that you can earn while you're bankrupt. There is also no limit to the amount you can save during your bankruptcy. However, if your after-tax income exceeds a set amount, you may have to make compulsory payments^[?]. This amount changes with how many dependents you have.

What are contributions

If your trustee determines you are earning over the income set amount, they'll ask you to pay income contributions Contributions is the word we often use for compulsory payments from your income.

Your trustee can use these contributions to help repay your debts. Your trustee will notify you how and when you need to make payments. Compulsory income payments are:

·       50% of the amount you earn above the income threshold (set amount).

·       Paid by you to your trustee, and may go towards your creditors.

·       Calculated by your trustee to determine the amount you need to pay, if any.

If you have any enquiries about these payments, contact your trustee.

Can I save money?

Funds you have in your account on the date of bankruptcy can become the trustee’s. Normally, you can save during bankruptcy if you keep your savings in an ordinary savings account.

If you place money in a term deposit account or purchase an asset, the cash has changed in nature. Therefore your trustee can claim it to help repay your debts.

Latest News Bankruptcy

Hobbico files for bankruptcy

CHAMPAIGN, Ill. (WCIA) -- Hundreds of jobs are in jeopardy after one of the biggest employers in the city filed for bankruptcy.

Hobbico announced its business is failing, so it's being sold. In the past two years their Champaign headquarters has lost about a third of its workforce. As of January 10th it's down to a little more than 300 jobs. 

Champaign County's economic development director says he just reached out to Hobbico this afternoon, offering to help their employees if they do decide to lay people off. 

Hobbico says they're in deep debt but they're trying to keep the company in tact.

"We don't want to lose the people, we don't want to lose the employment capability, we don't want the economy to take that hit." 

That's something Champaign County might have to deal with since Hobbico said their business is failing. 

From cars to planes, it's one of the largest U.S. distributors of radio-controlled and other hobby products. 332 people work at their Champaign headquarters.

"There's a bankruptcy filed and there may be future actions that could result from that, one of those could be a layoff."

Hobbico says they're trying to prevent that from happening. In the past they've restructured the business but that hasn't worked. Now they're putting it up for sale and hoping that will fix the problem. But there are hundreds of jobs at risk here. 

"A company like Hobbico has many all the way from warehouse distribution to high level management jobs, tech jobs, they have marketing jobs, they have business and accounting jobs." 

Lots of jobs that could be lost. But the county's economic development corporation has a way to help if that happens.     

"If they announce layoffs, keep them here and find other companies for them to work for with similar types of jobs." 

The county can't solve Hobbico's bankruptcy problems, but they can help the employees by creating job fairs and setting them up with other opportunities. 

Hobbico said its problems come from a growing competitive market and they've had issues with suppliers. Last week they shut down the office in Reno, Nevada. Asa result, hundreds of employees were let go. 

The company made a statement saying after the closure some of those jobs would be coming to Champaign. But with the bankruptcy announcement, that could be in question. 

They say the Champaign office will stay open through the bankruptcy process. 

We asked a representative from Hobbico how long the company could last without a buyer. But he said they have no comment on that. 

On top of this announcement, Hobbico is under a federal investigation. We first told you two weeks ago that leaders are accused of mismanaging employees' stock. Several current and former workers said their accounts have plummeted.