Australia is to implement various changes to their bankruptcy regime. This will undoubtedly increase the number of insolvent debtors entering into personal bankruptcy.
The Bankruptcy Amendments Bill 2017 was introduced into the Australian Parliament in October last year.
The proposed amendments to Australia’s bankruptcy regime are an attempt by the Government to promote entrepreneurship and to reduce the stigma associated with bankruptcy. These changes seem to largely mirror the reforms in bankruptcy practice that were implemented in England and Wales over 10 years ago now.
The most important change is the reduction of the bankruptcy term from the current 3 years to 1 year from the date of bankruptcy.
There are further changes to the regime:
a bankrupt’s ability to travel overseas with the permission of his/her Trustee in Bankruptcy
disclosure of bankruptcy status when applying for credit over the prescribed amount
a bankrupt being a Director of a company.
Although the reduction of the default term of bankruptcy from 3 years to 1 year there is a corresponding extension of a “prescribed period” to 3 years from the date on which the bankrupt files his Statement of Affairs. During these 3 years the bankrupt must continue to:
disclose to his/her Trustee in Bankruptcy information about his/her property, dispositions of property, conduct and examinable affairs
the bankrupt must keep and retain books and records that detail his/her income, transactions and other financial affairs.
Furthermore, a discharged bankrupt is still required to comply with his/her income contribution obligations for a minimum period of 2 years following discharge, or in circumstances where the bankruptcy term has been extended due to non compliance by the bankrupt for 5 to 8 years.
The Government believes that increasing the time in which a discharged bankrupt must comply with his/her income contribution obligations will mean that high income earners do not abuse the reduction in the default term of bankruptcy.
Finally, the reduction in term of bankruptcy from 3 years to 1 year will come to immediate effect. Practically, this will mean that existing bankruptcies will be immediately ended if they have been in place for over 1 year.
Changes in bankruptcy laws can be complicated so if you are looking to file for bankruptcy in the UK or are struggling to manage debts and would like to discuss your options please contact Farleys debt specialists. Call 0845 287 0939 or contact us through our online enquiry form.