Amendments to the Bankruptcy Act
On 24 June 2010, the Federal Parliament passed the Bankruptcy Legislation Amendment Act 2010. The changes arose from the Government’s concern over the growing number of consumers who are turning to bankruptcy and unable to pay their debts as and when they fall due.
The most significant amendment is increasing the minimum debt that creditors can petition for forced bankruptcy from $2,000 to $5,000. This is a reduction from the original proposed figure of $10,000. The Government hopes that raising the petitioning creditor’s debt threshold will reduce the likelihood of a bankruptcy notice being used as a debt collection alternative. This amendment will come into affect from 12 August 2010.
The second significant change is extending the stay period before creditors may issue enforcement proceedings or move on a debtor’s assets from 7 to 21 days. It is argued that a longer stay period will increase the likelihood of the debtor obtaining proper information and advice about all options available. The commencement of this amendment has yet to be announced.
Further amendments include:
- changing the process for fixing and reviewing trustee remuneration
- strengthening the penalties for some offences, particularly those involving fraud
- enhancing the powers of the Inspector-General in Bankruptcy to investigate possible offences.
A new form of Bankruptcy Notice will also be in use from 1 August 2010 and the issuing fee has been increased as of 1 July 2010.
For further information on the amendments to the Bankruptcy Act, please contact one of our experienced Dispute Resolution & Litigation lawyers.
Author: Louise Tolson