What if I use it to buy a home?
Section 116 of the Bankruptcy Act 1966 prescribes what
property is available to creditors, and what is not. Property that
is unavailable upon bankruptcy is described as 'exempt
property'.
Section 116(2)(d) of the Bankruptcy Act states that policies of
life insurance held by the bankrupt and/or their spouse or de facto
partner are exempt property where the proceeds of such policies are
received on or after the date of bankruptcy.
On a recent Worrells administration, the question arose as to
whether the proceeds of a life insurance policy (from the
bankrupt's deceased husband) used to purchase real property in
the bankrupt's name, is exempt property, or whether that is
deemed as 'after acquired' property and therefore available
to creditors under section 58(3) of the Bankruptcy Act.
