AustraliaI went bankrupt. Can my creditors access the personal injury compensation I received?
No, personal injury compensation you receive after bankruptcy is generally protected from creditors under Australian law.
What the Law Says
The Bankruptcy Act 1966 (Cth) specifically excludes certain types of personal injury compensation from the bankrupt estate, meaning creditors cannot claim it.
Under Australian bankruptcy law, money you receive as compensation for personal injury — including pain and suffering, loss of earnings, or medical expenses — is not considered part of your divisible property if it is received after you become bankrupt.
This protection applies only to compensation arising from personal injury to you (or your spouse or child), and only if the compensation is received after the date of bankruptcy. Compensation received before bankruptcy may form part of the estate unless otherwise protected.
The law treats this compensation as 'excluded property', so it remains yours and is not available to pay your debts.
Statutory TextThe property of a bankrupt does not include… (g) any amount payable to the bankrupt in respect of personal injury to the bankrupt, or to his or her spouse or child, whether payable under an award, settlement or otherwise.
— Bankruptcy Act 1966 (Cth), s. 116(2)(g) — Excluded property
What to Do
Keep clear records showing the source, purpose, and date of receipt of the compensation payment.
Notify your bankruptcy trustee in writing if you receive personal injury compensation after bankruptcy — even though it’s protected, transparency avoids delays or disputes.
Do not mix the compensation funds with other bank accounts; keep them in a separate account to clearly demonstrate they are excluded property.
If your trustee claims the payment is not protected, seek legal advice — especially if the payment includes non-personal-injury components (e.g., property damage).
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.