Higher minimum debt for Bankrupt will reduce Bankrupcty Notices

The Attorney General’s Department has recently released an exposure draft of proposed amendments to the Bankruptcy Act on 25 August 2009.

There are a number of technical “restructuring” type changes proposed to be made to the Bankruptcy Act which include a restructure of the organisation of the “Districts” for Bankruptcy, a streamlined process for remuneration of trustees and increase in penalties for non-complying individuals.

One of the changes is a proposed increase of the minimum debt amount a creditor may issue a bankruptcy notice from $2,000.00 up to $10,000.00.

Comment from Mark Streeter Sydney Lawyer

Bankruptcy Notices are often used as an enforcement mechanism by debt collection and debt recovery firms.  Many more Bankruptcy Notices are issued than proceedings actually commenced (or sequestration orders made).

In the financial year 2008/2009 there were 1,953 sequestration (Bankruptcy) orders made across Australia.  1,551 were for an amount greater than $10,000.00 . This means 402 of these orders would not have been made under the new proposed minimum of $10,000.00 (approx 20%) of the current orders made.

A full copy of the legislation amendment draft can be downloaded from this link to Attorney General’s Department