Contrary to common belief, bankruptcy does not mean that a bankrupt cannot leave Australia until discharged.
Perhaps surprisingly there is no legislative prohibition on bankrupts leaving the country. Trustees have a discretion regarding bankrupts who want to travel overseas and they must act reasonably remembering that
“Bankruptcy is not about punishing people –
it is about providing financial rehabilitation”.
Section 77 of the Bankruptcy Act requires bankrupts to surrender passports to their trustee. Trustees will often lodge Passenger Analysis Clearance and Evaluation (PACE) notices with the Department of Immigration at the start of a bankruptcy to ensure a bankrupt cannot leave the country until the trustee has completed their investigations. But
“We must never lose sight of the fact that people are allowed
to earn an income including taking overseas jobs. Sometimes taking a job overseas allows bankrupts to pay income contributions to their estate”.
There may be any number of reasons why a bankrupt would want to leave the country, including, work prospects, to return home, or to visit family. A trustee will normally provide the bankrupt’s passport to the bankrupt to allow travel to occur. In some circumstances this may even allow the bankrupt to leave Australia permanently.
Where a bankrupt is subject to income contributions or perhaps when investigations have not been completed, Worrells trustees often take the approach of asking a bankrupt to lodge a monetary surety which is returnable when the passport is handed back.
Quotes from Ivor Worrell