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On October 19th 2017, an amendment to the Bankruptcy Bill was introduced into parliament. While it is currently unknown when this Bill will be finalised, the changes proposed are expected to make a big difference in the lives of many Australians.
What changes does the Bill propose?
The time of bankruptcy is to be reduced from three years to one year. This will mean the bankrupt will be discharged 12 months after the date of declaring bankruptcy.
After the 12 months has passed, the discharged bankrupt will no longer have to declare their history with bankruptcy. This means they will be free to apply for a line of credit without disclosing their bankruptcy.
After one year, the discharged bankrupt will no longer need to gain permission before travelling overseas.
After the 1 year period of bankruptcy, the discharged bankrupt will be allowed to be appointed as a trustee or company director and able to carry out all duties involved with the title.
What will stay the same?
The Bill does not propose any changes to the income contribution of a bankrupt. The bankrupt will still be obligated to make the contributions for two years following discharge. This will mean three years total, the same length of time as the current Bill states.
Will this affect those who are currently bankrupt?
No, the Bill is not retrospective. These changes will only affect those who declare bankruptcy after it passes. In cases where bankruptcy has been extended (this can be up to eight years) due to non-compliance, this Bill will have no effect.
When will this Bill pass?
The Bill is expected to come into effect six months after it receives Royal Assent. According to the Explanatory Memorandum, this is designed to 'give trustees time to prepare any objections to discharge, and will enable relevant agencies time to consider whether a one-year licensing or professional restriction is appropriate for their purposes'. It is currently unknown when the Bill will receive Royal Assent.
Why are they making changes to the Bill?
The amendment was proposed with the expectation that the changes will encourage more people to declare bankruptcy, instead of trying to make it through on their own, or entering into long term debt agreements. Australia has a history of punishing financial failure, and the idea is that this new Bill will begin to rectify this. Prime Minister Malcom Turnbull has said in the past that it is often the small business owners who end up filing for bankruptcy. The amendments to the Bankruptcy Bill will mean these start-up entrepreneurs will not have to be out of the game for such a long period of time.
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