If bankrupt will my compensation pay my creditors?

If I become bankrupt will my compensation go to pay my creditors?

No it will not.

Compensation that you receive from your personal injury claim does not form part of your estate in bankruptcy.

Therefore, the Trustee in Bankruptcy is not able to use any compensation or damages payments relating to your personal injury claim, to meet debts owing under your Bankruptcy.

This applies, whether you are declared bankrupt before, or after you receive your compensation payment for your personal injury compensation or damages claim.

We explain more below as to some of the impacts that compensation claims can have on your finances below…

Can I get any accident injury compensation?

Injuries can have a devastating impact on your income, talk to us about your claim

Unfortunately when a person suffers injury and they are unable to return to work or to running their business, this can have a devastating impact on their financial circumstances. 

We all have financial commitments to meet and when you are employed and earning income, then we all tend to incur greater financial commitments because we are able to afford them.

However, when you are suddenly injured and that weekly income payment stops, or is significantly reduced, and you can no longer meet your weekly credit card, mortgage, or car or personal loan payments, then this can be a real issue.

It can often cause serious and terrible anxiety and stress for the injured party, their partner and family.

We can help you identify and access revenue streams during your compensation claim

We at The Personal Injury Lawyers have seen this problem over and over again in our near forty years experience running personal injury claims.

What we do is tell our clients up front that they should not stress over this issue as there are options available to them and which we can help them identify and access.


  • Including income disability insurances

  • Advances on damages from the claim insurer

  • Credit and loan insurances


There are also litigation loans where you are able to obtain a lump sum payment from a litigation lender, that does not have to be paid back until the end of your personal injury claim, and only if you achieve compensation.

What if debts become so unreasonable that bankruptcy becomes the best option for an injury victim?

There are circumstances where the debts that accrue in not being able to meet substantial loan payments or credit card debts, become so unreasonable in the circumstances of increasing and accruing interest, that Bankruptcy becomes the best option for an injury victim.

Although no one wishes to be in the position where they have to declare bankruptcy, there are some circumstances where it is just not able to be avoided.

It may be through no fault of the injured person who has only been placed in such a position because of someone else’s negligence.

Personal injury claim compensation and damages cannot be used to meet any debts of the bankruptcy estate.

The compensation payment remains separate from the bankruptcy and cannot be accessed by the Trustee in Bankruptcy.  

Similarly any assets purchased with compensation received for personal injury are also protected from the bankruptcy and cannot be used to pay creditors, whether purchased before or after bankruptcy is declared.

How much compensation did other people get awarded for their injuries?

To help you understand more how much other people were awarded for their compensation claims, (who may have similar injuries to you) we pulled together some helpful, real life personal injury payout examples..

These include compensation for injury at work as well as car accident injuries, workplace injury and slips, trips and falls. You may have suffered an injury that means that you can’t return to work. We assess the type of injury that you have suffered and will look at current medical reports, the costs of your future medical treatment, along with important factors such as whether you are left with a total and permanent disability.

TPD claim lawyers Brisbane,
Gold Coast & Australia wide

As long established personal injury lawyers, we can help with Queensland motor vehicle accident claims, WorkCover compensation claims and many more claim services. We also offer Australia wide support to help you with your TPD super claim. Try our fast, free TPD compensation payout checker below.