The Australian government has not been ignoring personal insolvency reform in 2020, despite its recent small business reforms dealing only with the smaller proportion of corporate businesses.
The government says it is to increase the personal bankruptcy threshold from $5,000 to $10,000, a reason being that it did not want people being made bankrupt for relatively small amounts. The consequences of bankruptcy in Australia are severe, with bankruptcy lasting for at least 3 years.
The threshold was temporarily lifted from $5,000 to $20,000 on March 24 2020 in response to the COVID-19 pandemic. The new threshold of $10,000 will be permanent, and comes into effect on January 1, 2021, when the temporary threshold expires.
There had been requests from some quarters to raise it to $50,000. The amount of $5,000 dates from 2010.
The temporary bankruptcy measures that commenced on 24 March 2020 – the period for compliance with a bankruptcy notice from 21 days to six months, and protections under a declaration of intention to present a debtor’s petition from 21 days to six months – will both revert to 21 days from 1 January 2021. Declarations of intent have not been much used – under 40 a month – despite the 6 months stay they offer; they are called temporary debt protections by AFSA.