The key features of the Bill are as follows:
From 3 Years to 1 Year – The time a bankrupt will remain bankrupt will be reduced from 3 years to 1 year. The bankrupt will be discharged at the end of the period of 1 year from the date on which the bankrupt filed his or her statement of affairs.
Can apply for Credit– After the 1 year period has ended the discharged bankrupt will no longer be required to disclose his or her status as a bankrupt when applying for credit;
Permission to Travel Overseas – Will no longer be required to ask permission to travel overseas.
Company Directorship – Will then be permitted to serve as or be appointed as a company director.
Income Contributions – However this one is interesting, income contribution obligations of discharged bankrupts will continue for two years after you are released from bankruptcy, so in effect this is the same as it is right now, as a bankrupt you are required to make income contributions for 3 years. So this stays the same. Remember if you are not compliant your bankruptcy can still be up to five to eight years.
Timeframe –The 1-year discharge will commence 6 months after the Bill receives Royal Assent. (when this royal assent will occur is unknown at this stage – Don’t get too excited this could take some time it’s the government remember). This is designed togive 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.
Current Bankrupts – Its looks like individuals that are currently bankrupt will not be affected by these changes they are not retrospective. Ongoing bankruptcies which have been extended for 5 to 8 years due to an objection to discharge will remain unchanged.
Bankruptcy Experts expects that these changes will allow people who are swamped with debt to suffer less if they file for bankruptcy. The proposed changes will allow be that more people will declare bankruptcy rather than try to struggle through – especially if they have minimal assets. This may equate to less people trying to enter into Debt Agreements to settle their debts over a longer period. Australia sadly has a history of punishing financial failure. This is a nice cultural shift in thinking. As Malcolm Turnbull said years ago, when this reduction in time served as a bankrupt was first suggested (we are paraphrasing here) its often the small business owners and entrepreneurs who have financial reversals that are filing for bankruptcy, they shouldn’t be aced out of the game for 3 years for having a go. If you need to know more about bankruptcy feel free to call us here at Bankruptcy Experts on 1300 795 575.