Bankruptcy Law Reform
On 8 July 2024, the Attorney-General announced significant reforms to Australia’s bankruptcy laws aimed at reducing stigma and ensuring fairness in the bankruptcy system.
Background
On 2 March 2023, a national roundtable was convened by the Attorney-General with key stakeholders across all sectors of the personal insolvency system with an aim to better understand the potential key areas for reform.
Following the Roundtable, the government identified four short term priorities to meaningfully improve the Australian personal insolvency system and progress amendments to the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
What are the key changes of the reform?
The key changes include:
Increasing the threshold for involuntary bankruptcies from $10,000 to $20,000, with the threshold to be indexed each year;
Increasing the timeframe in which a debtor may respond to a bankruptcy notice from 21 days to 28 days;
Reducing the period a discharged bankruptcy is publicly recorded on the National Personal Insolvency Index to seven years following discharge from bankruptcy; and
Removing the proposal, or acceptance, of a debt agreement as an act of bankruptcy for the purposes of subsection 40(1) of the Bankruptcy Act.
What is a Minimal Asset Procedure?
Additionally, the Attorney-General’s Department has begun consulting on introducing a Minimal Asset Procedure in Australia, modelled after New Zealand’s No Asset Procedure. The Minimal Asset Procedure offers low-income and low-asset debtors an alternative to bankruptcy, allowing for swift debt clearance while ensuring fairness to creditors.
Public consultation for the Minimal Asset Procedure closes on 29 July 2024 and is open to all members of the public. Submissions can be made here.
For more information on how these Bankruptcy Law Reforms might impact you or your business, please contact us.
Ali Erskine
Principal
M 0419 884 992 | T 03 5225 5208
E aerskine@ha.legal
Jemimah Fitzgerald
Graduate Lawyer
T: 03 5225 5219
E: jfitzgerald@ha.legal