Bankruptcy minimum raised from $2,000 to $5,000

29-November-2010 Fraud and Insolvency By admin

Higher minimum debt for bankrupt individuals will reduce bankrupcty notices

On 24 June 2010 the Federal Parliament passed amendments to the Bankruptcy Act 1966.

There were a number of technical “restructuring” type changes to the Bankruptcy Act which included 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 was an increase of the minimum debt amount a creditor may issue a bankruptcy notice from $2,000.00 up to $5,000.00. Although the initial Bill proposed the amount to be increased to $10,000.00, following the Senate Legal and Constitutional Affairs Legislation Committee report in February 2010 it was agreed to amend the proposed amount to $5,000.00.

The amended provisions took effect from 11 August 2010.

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. Many of these were for an amount less than $5,000.00. This means many orders would not have been made under the new proposed minimum of $5,000.00.

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