25 August 2009
REFORMS TO PERSONAL BANKRUPTCY LAWS
Attorney-General, Robert McClelland, today released the Government’s proposed reforms to Australia’s personal bankruptcy laws for public consultation.
The Bankruptcy Legislation Amendment Bill 2009 seeks to modernise personal insolvency arrangements by recognising that the majority of bankruptcies relate to consumer debts and involve people with relatively few assets and little income.
“Increasingly, bankruptcies tend to involve people who have simply fallen on hard times rather than unscrupulous debtors trying to avoid paying their debts,” Mr McClelland said.
The proposed amendments will give those in financial distress a more realistic opportunity to consider their options, reorganise their affairs and where possible, avoid bankruptcy, by:
- increasing the minimum debt for which a creditor can petition for bankruptcy from $2,000 to $10,000;
- increasing the stay period from when a declaration of intent to file a debtor’s petition is filed to when a creditor may commence action to recover debts from seven to 28 days; and
- increasing the income, asset and debt thresholds to allow more people in financial distress to enter into voluntary debt agreements.
In addition, the Bill proposes to strengthen the penalties for some offences, particularly those involving fraud, to appropriately reflect the seriousness of the conduct and ensure the penalties align with similar offences in other Commonwealth, State and Territory legislation. It also strengthens powers for the Inspector-General in Bankruptcy to investigate possible offences.
“The Government is committed to ensuring our bankruptcy laws are able to deal with personal insolvency issues quickly and efficiently so that people can get back on their feet as soon as possible.”
These reforms aim to ensure those in financial difficulty have the opportunity and the ability to obtain advice and information about their options and possible alternative solutions before entering bankruptcy.
Amendments will be made in close consultation with all relevant stakeholders and as such, the draft Bill will be open for public comment until Monday, 14 September 2009.
The draft Bill and accompanying Explanatory Memorandum are available on the Attorney-General’s Department website at www.ag.gov.au.
Media Contact: Adam Siddique 0407 473 630