Some debtors, seeing the threat of bankruptcy, try to get rid of their property first by transferring it to others, often to family members. Under the 'clawback' provisions of the Bankruptcy Act 1966 a trustee can take back some property that no longer belongs to the bankrupt, such as property that was sold, or given away, with intent to defraud creditors and not for its real value. Since December 1996 trustees have greater powers to set aside certain transactions entered into up to five years before the bankruptcy. Where the transaction occurred more than two years before the bankruptcy and the debtor can show he or she was not insolvent at the time, the transaction cannot be set aside [Bankruptcy Act 1966 ss 120,121].

Where a payment was made to a creditor the Official Receiver may on behalf of the trustee issue a notice requiring repayment of the sum [s 139ZQ]. A person disobeying a notice faces up to six months gaol [s 139ZT]. A person can apply to the court to set aside a notice [s 139ZS]. Where the transaction concerns property a charge can be registered over the property [s 139ZR]. The charge has priority over any other mortgage, lien, charge, or encumbrance unless it was a genuine transaction at arms length for valuable and adequate consideration.

Exceptions to this include [s 120]:

Similarly, where a bankrupt (transferor) transfers property to another party (transferee) and the transferee then gives money (or anything else of value) in consideration of this transfer to a third party, these transactions can also be set aside [Bankruptcy Act 1966 s 121A]. The Act allows a trustee to treat the transaction as if it had occurred between the transferor and the third party directly.