Temporary debt relief measures will be wound back on January 1: AFSA

THE Australia Financial Security Authority (AFSA) has announced Federal Gobvernment changes to bankruptcy laws that were amended in 2020 to cope with the COVID-19 economic situation.

In March 2020, the Australian Government announced a series of changes to bankruptcy law, as part of the wider economic response to the COVID-19 pandemic.. The temporary changes included:

• an increase in the debt threshold, which enables 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.

As of January 1, 2021, those temporary changes will cease, according to AFSA. An amendment has also been made to adjust the bankruptcy threshold. This means:

• the minimum amount of debt that can trigger bankruptcy is $10,000, down from $20,000;
• the amount of time an individual has to respond to a bankruptcy notice is 21 days, reduced from six months;
• temporary debt protection allows for 21 days relief from creditors, instead of six months.

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. The Federal Gvernment has amended the bankruptcy regulations to adjust the threshold for petitioning bankruptcy to $10,000 or more.

www.afsa.gov.au

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