Questions about Bankruptcy Law changes are becoming are increasing dramatically at this very difficult time. So what changes have actually occurred recently to the Bankruptcy Laws. It seems there is an enormous amount of misinformation out there so in an attempt to clarify things we have put this notice together.
As the COVID-19/Coronavirus continues to impact individuals and businesses it’s important to know what temporary measures the government has put in place for people considering bankruptcy or company directors who are struggling financially and are worried about trading insolvent.
On 24 March 2020, the Australian Government made changes to the Bankruptcy law as part of the economic response to the Coronavirus. These temporary changes will be in place for six months from 25 March 2020.
The temporary changes to bankruptcy law are:
The debt threshold for creditors to apply for a Bankruptcy Notice against a debtor will increase from $5,000 to $20,000. This means you have to owe someone $20,000 or over before they can take you to court to bankrupt you. This is irrelevant of course if you just want to go bankrupt yourself.
Timeframe for a debtor to respond to a Bankruptcy Notice before a creditor can commence bankruptcy proceedings will be increased from 21 days to up to six months. Once again this is someone who is trying to bankrupt you, they will now be required to wait 6 months now to get a court order to bankrupt you. Remember this is the step after the initial statutory demand phase.
Temporary relief for directors from any personal liability for trading while insolvent for 6 months. In other words, a creditor such as the ATO cannot make you as a director personally liable for company debts for the next 6 months no matter how insolvent you are trading.
If you need to know more about these temporary changes due to COVID-19 or Coronavirus and how it may impact you feel free to call us here at Bankruptcy Experts Frankston on 1300 795 575 or visit our website: www.bankruptcyexpertsfrankston.com.au.