The Federal Government had introduced a multitude of measures aimed at protecting individuals in financial difficulty since the start of the Covid-19 pandemic. We have previously written about these temporary protections which were due to end on 31 December 2020. The temporary protections included:
- An increase in the amount which a creditor must be owed to bankrupt someone from $5,000 to $20,000; and
- Increasing the time frame provided to respond to a bankruptcy notice from 21 days to 6 months.
The Federal Government recently announced that the temporary protections will not be extended. However, they have changed the threshold amount which a creditor must be owed to issue a bankruptcy notice so that:
- The threshold to issue a bankruptcy notice is permanently fixed at $10,000, up from the pre-pandemic amount of $5,000; and
- The time allowed to respond to a bankruptcy notice has been changed back to 21 days.
If a creditor is owed a debt of more than $10,000 they can therefore now issue a bankruptcy notice to a debtor and if the debtor does not pay the debt within 21 days of service of the bankruptcy notice, the creditor can apply to Court to make the debtor bankrupt.
These provisions take effect from 1 January 2021.
If you wish to discuss the contents of this article or to explore all the options that may be available to you, get in touch with us on 1300 906 966 or send us an email at firstname.lastname@example.org to arrange a free confidential initial discussion.
Our team of consultants is led by specialists who are members of Chartered Accountants Australia & New Zealand (CAANZ), the Australian Restructuring Insolvency & Turnaround Association (ARITA) and the Association of Independent Insolvency Practitioners (AIIP).