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Sladen Snippet – Proposed changes to Australian bankruptcy law

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The Australian government has proposed a reform to the Australian bankruptcy system to increase fairness in the system for debtors.

Key proposed changes include:

  1. Threshold for involuntary bankruptcies increasing to $20,000 from the current amount of $10,000;

  2. A debtor having 28 days to respond to a bankruptcy notice instead of 21 days;

  3. Following a discharge from bankruptcy, the bankruptcy will be publicly recorded on the National Personal Insolvency Index for a reduced period of 7 years; and

  4. The proposal or acceptance of a debt agreement no longer being classified as an act of bankruptcy under section 40(1) Bankruptcy Act 1966 (Cth).

The proposed reforms are in line with recent consultations undertaken by the Australian government to introduce a Minimal Asset Procedure.

A Minimal Asset Procedure will allow a debtor, who has no other means to pay, to access a clean start sooner than they would be able to through a bankruptcy.

Submissions for consultation on the Minimal Asset Procedure closed on 29 July 2024. The Australian government will now commence reviewing these submissions and make appropriate amendments to the proposed reforms.

The aim is to ensure Australia’s personal insolvency and bankruptcy systems both remain fair and balanced.

Please contact the writer on the following contact details if you would like more information or would like to discuss any of the above:

Alicia Hill
Principal
T: +61 3 9611 0180 | M: +61 484 313 865
E: ahill@sladen.com.au

Brigitte Fraser
Law Clerk
E: bfraser@sladen.com.au

Alicia Hill