On 24 March 2020, the Commonwealth Government announced an increase in the threshold for personal bankruptcy actions from $5,000 to $20,000, as a temporary COVID-19 “protection” measure (r 6.03B Bankruptcy Regulations 1996 (Cth), Compilation No. 30). The lift was envisioned to ease the impact of coronavirus crisis on recession-hit Australians, making it more difficult to place a debtor into bankruptcy over a small amounts of debt.
Although scheduled to cease on 1 January 2021, the December 2020 press release has announced a permanent fixation of the bankruptcy threshold at $10,000 (r 4.02AA Bankruptcy Regulations 1996 (Cth)) As explained by the Attorney-General, Christian Porter, the doubling of the pre-pandemic rate “will ensure that Australians in financial difficulty are not made bankrupt over relatively small amounts of debt”, noting the temporary six month period for compliance with a bankruptcy notice, has reverted to 21 days, from 1 January 2021.
In light of recent amendments, the debts below $10,000 are now effectively unrecoverable without adequate securities in place and it is imperative that Creditor’s ensure they are adequately protected, by good terms of trade.
Irish Bentley Lawyers can assist Creditors to protect their position. Please feel free to contact us on 07 3229 4060 to speak with one of our Lawyers who may be able to assist you.
Because this article is general in nature it should not relied on or construed as legal advice as it does not take into account the particular circumstances of a matter.