End of Temporary Debt Relief Measures
In March 2020, due to the wider economic response to the COVID-19 pandemic, the Australian Government implemented a range of temporary changes to bankruptcy legislation. These changes were addressed in our earlier article which can be viewed here.
The temporary changes included:
- an increase in the debt threshold, which enabled creditors to apply for a bankruptcy notice
- an increase to the timeframe for a debtor to respond to a bankruptcy notice
- an increase to the temporary debt protection period available to debtors.
These changes were to continue until 31 December 2020.
As of 1 January 2021, the temporary changes ended and the law reverted to its previous state. At this time an amendment was also enacted to change the bankruptcy threshold. This change means:
- the minimum amount of debt that can trigger bankruptcy is $10,000, down from $20,000 (being the amount under the COVID-19 temporary relief period)
- the amount of time an individual has to respond to a bankruptcy notice is 21 days, reduced from six months (being the amount under the COVID-19 temporary relief period)
Before the temporary changes were implemented in response to the COVID-19 pandemic, the minimum amount of debt that could trigger a bankruptcy was $5,000.
Given that the temporary relief has now ended, creditor’s may seek to take action given the reduction of the timeframe to respond from six months to 21 days. As such, if you have received a bankruptcy notice, please do not hesitate to contact our office to understand your rights and obligations in dealing with same.
For further information, please contact Roser Lawyers.