106YAEffect of bankruptcy

#### 106YA Effect of bankruptcy (1) This section applies in relation to a bankruptcy if: (a) before the bankrupt’s bankruptcy date, the bankrupt incurred: (i) an accumulated HEC debt; or (ii) a semester debt or semester debts; or (iii) both; and (b) that debt or those debts had not been discharged before the bankruptcy date. Debts related to pre‑bankruptcy period are provable (2) Subject to subsection (5), the following are taken to be provable debts for the purposes of the Bankruptcy Act: (a) the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt; (b) the unpaid part of the semester debt, or of each of the semester debts. > Note 1: An accumulated HEC debt and a semester debt can be discharged and replaced by a new accumulated HEC debt through the operation of sections 106N and 106O. > Note 2: If an accumulated HEC debt, or a semester debt that the bankrupt incurred before the bankrupt’s bankruptcy date, is discharged and replaced in this way: (a) it ceases to be a provable debt; and (b) subsections (6) and (7) of this section can apply to the new accumulated HEC debt; and (c) for that purpose, a pre‑bankruptcy part for the bankrupt’s new accumulated HEC debt is calculated under subsections (8) and (9). Debts related to post‑bankruptcy period not provable (3) To avoid doubt, the following are taken not to be provable debts for the purposes of the Bankruptcy Act: (a) the bankrupt’s accumulated HEC debt (apart from the pre‑bankruptcy part of that debt); (b) any semester debt incurred by the bankrupt on or after the bankrupt’s bankruptcy date. Dividend taken to be voluntary payment (4) A dividend paid under the Bankruptcy Act to the Commonwealth in respect of: (a) the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt; or (b) a semester debt mentioned in subsection (1); is taken for the purposes of this Part to be money that the bankrupt has directed to be applied in payment of that debt. No release on discharge from bankruptcy (5) Section 153 of the Bankruptcy Act does not operate to release the bankrupt from the following: (a) all or any part of the accumulated HEC debt; (b) a semester debt mentioned in subsection (1). Replacement of accumulated HEC debt (6) If: (a) subsections (2) to (5) apply to an accumulated HEC debt (the old HEC debt) of the bankrupt (including because of a previous application of this subsection or subsection (7)); and (b) the old HEC debt is discharged under section 106O because the bankrupt incurred another accumulated HEC debt (the replacement HEC debt) under section 106N; then: (c) after the replacement HEC debt is incurred, those subsections apply (subject to any later application of this subsection) to the replacement HEC debt instead of the old HEC debt; and (d) for that purpose: (i) a proof of debt under the Bankruptcy Act in relation to the pre‑bankruptcy part of the old HEC debt (including because of a previous application of this subsection or subsection (7)) is taken to relate, to the extent of that proof, to the pre‑bankruptcy part of the replacement HEC debt; and (ii) if at the time the old HEC debt is discharged under section 106O, a semester debt of the bankrupt is also discharged under that section—a proof of debt under the Bankruptcy Act in relation to the semester debt is taken to relate, to the extent of that proof, to the pre‑bankruptcy part of the replacement HEC debt. Replacement of semester debt only (7) If: (a) immediately before the bankrupt’s bankruptcy date, the bankrupt had: (i) one or more undischarged semester debts (an old semester debt); and (ii) no undischarged accumulated HEC debt; and (b) on or after the bankruptcy date, the unpaid part of an old semester debt is discharged under section 106O because the bankrupt incurred an accumulated HEC debt (the new HEC debt) under section 106N; then: (c) after the new HEC debt is incurred, subsections (2) to (5) apply (subject to any later application of subsection (6)) to the new HEC debt instead of the old semester debt; and (d) for that purpose, a proof of debt under the Bankruptcy Act in relation to the old semester debt is taken to relate to the pre‑bankruptcy part of the new HEC debt. (8) Subject to subsection (9), the pre‑bankruptcy part of a bankrupt’s accumulated HEC debt is the amount that would be the bankrupt’s relevant debt calculated in accordance with subsections 106Q(2) and (3), if: (a) that amount was calculated as at the time immediately before the bankrupt’s bankruptcy date; and (b) the reference in paragraph 106Q(2)(a) to the person’s accumulated HEC debt referred to in paragraph (1)(b) were a reference to the person’s accumulated HEC debt on the 1 June immediately preceding the bankruptcy date. (9) If: (a) immediately before the bankrupt’s bankruptcy date, the bankrupt had one or more undischarged semester debts; and (b) at a time (the discharge time) on or after the bankruptcy date, the unpaid part of those debts (the discharged amount) was discharged because of the operation of section 106O; then: (c) if the bankrupt did not have an accumulated HEC debt immediately before the discharge time—the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt is equal to the discharged amount; or (d) otherwise—the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt is taken to be increased at the discharge time by an amount equal to the discharged amount. (10) In this section: > bankrupt has the same meaning as in the Bankruptcy Act. > bankruptcy has the same meaning as in the Bankruptcy Act. > Bankruptcy Act means the Bankruptcy Act 1966. > bankruptcy date, in relation to a bankrupt, means the date of the bankruptcy of the bankrupt (within the meaning of the Bankruptcy Act). > dividend has the same meaning as in the Bankruptcy Act. > pre‑bankruptcy part, in relation to a bankrupt’s accumulated HEC debt, has the meaning given by subsections (8) and (9). > provable debt has the same meaning as in the Bankruptcy Act.