AustraliaI gave away my house to family before going bankrupt. Can the trustee claw it back?
Yes, the bankruptcy trustee can likely claw back your house if you gave it away to family within 5 years before bankruptcy — especially if you were insolvent or didn’t receive market value.
What the Law Says
The Bankruptcy Act gives the trustee power to undo transfers of property made before bankruptcy if they were intended to defeat creditors or lacked proper value.
Under Australian bankruptcy law, if you give away your house (or any asset) to a family member before becoming bankrupt, the trustee in bankruptcy may recover it — this is called a 'clawback'. The law treats such transfers as void against the trustee if they meet certain conditions.
The key test is whether the transfer was made with the intention of defeating creditors, or whether you received less than market value — especially if you were insolvent at the time. The law presumes insolvency if the transfer happened within 2 years before bankruptcy.
Even if there was no bad intent, a gift (i.e., transfer for no money or less than full value) made within 5 years before bankruptcy can be reversed — unless you prove you were solvent and the transferee gave valuable consideration.
Statutory TextA transfer of property by a person who is insolvent is void against the trustee in bankruptcy if the transfer was made within 5 years before the date of the bankruptcy.
— Bankruptcy Act 1966 (Cth), s. 120 — Transfer to defeat creditors
Statutory TextA transfer of property by a person who is insolvent is void against the trustee in bankruptcy if the transfer was made within 2 years before the date of the bankruptcy and the transferee was an 'associate' (e.g., family member).
— Bankruptcy Act 1966 (Cth), s. 121 — Transfers to defeat creditors
What to Do
Get legal advice immediately — timing and evidence of solvency matter.
Gather proof of your financial position at the time of the transfer (e.g., bank statements, tax returns, valuations).
Do not make further transfers or hide assets — this risks criminal penalties.
Cooperate with the trustee — voluntary repayment or settlement may avoid court action.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.