Bankruptcy Law – Temporary debt relief measures ended on 1 January 2021

In March 2020, the Australian Government announced a series of changes to bankruptcy law, as part of the wider economic response to the COVID-19 pandemic.

The temporary changes included:

• an increase in the debt threshold, which enabled creditors to apply for a bankruptcy notice
• an increase to the timeframe for a debtor to respond to a bankruptcy notice
• an increase to the temporary debt protection period available to debtors.

As of 1 January 2021, those temporary changes have ceased. An amendment has also been made to adjust the bankruptcy threshold. This means:

• the minimum amount of debt that can trigger bankruptcy is $10,000, down from $20,000
• the amount of time an individual has to respond to a bankruptcy notice is 21 days, reduced from six months
• temporary debt protection allows for 21 days relief from creditors, instead of six months.

Before the temporary changes were implemented in response to the COVID-19 pandemic, the minimum amount of debt that could trigger a bankruptcy was $5,000.

The government has amended the bankruptcy regulations to adjust the threshold for petitioning bankruptcy to $10,000 or more.

For assistance with issuing or responding to Bankruptcy Notices or for further information please contact Paul Thorndike 0429008247.

Reference: AFSA Newsroom