Bankruptcy is a tough reality to face. It has a range of obligations which impact your life. People entering bankruptcy must also face the stigma associated with it. The introduction of the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 is set to ease these burdens. Also known as the one year bankruptcy bill, we take a look at the key features of the bill and what they mean for those facing bankruptcy.

What is the one year bankruptcy bill?

The bill is part of the Federal Government’s proposed changes to Australia’s corporate insolvency laws. It was passed on October 19, 2017.  The bill replaces clauses in the original Bankruptcy Act 1966. It features the ‘Safe Harbour’ and ‘Ipso Facto’ clause legislation passed earlier this year. In other words, it suggests Bankruptcy is often the result of making bold business decisions as opposed to avoiding debt commitments. By changing it to a one year bankruptcy period instead of three, it will encourage people to take more business risks.

Why was a one year bankruptcy bill introduced?

By reducing the minimum bankruptcy period, from three years to one, the bill is intended to foster innovation and risk-taking in line with the National Innovation and Science Agenda (NISA). It gives those affected a chance to wipe the slate clean, and re-engage in entrepreneurial activity. Acknowledging that bankruptcy can be the result of necessary risk-taking or misfortune rather than intentional wrongdoing, it tips the balance further in favour of the debtor.

What are the key features of a one year bankruptcy?

The one year bankruptcy bill will reduce the bankruptcy period to one year. A bankrupt is discharged one year after they file their Statement of Affairs. This is reduced from the 3 years set out in section 149 of The Bankruptcy Act. Where misconduct has occurred, Trustees will still have the power to object and extend the bankruptcy to up to 8 years. Some administration aspects of the one year bankruptcy will still last for 3 years even though you may be discharged after one.

Restrictions reduced to one year.

  • Disclosure of bankruptcy when applying for credit
  • Seeking permission to travel overseas
  • Non-accrual of further debts
  • Entering certain employment or professions (e.g. company director)
  • Holding certain licenses (e.g. real estate licenses or licenced builder)

Income obligations to remain at three years.

If earnings after tax exceed the set amount, bankrupts still have to make compulsory payments for two years following the one year discharge. Or 5-8 if the bankruptcy period is extended due to non-compliance.

Immediate one-year discharge

This applies to people who are currently Bankrupt and have been so for more than one year. It doesn't apply where misconduct has extended the terms. If you are yet to enter Bankruptcy, you will enter a one year bankruptcy period.

Ongoing extended bankruptcies of 5-8 years

Your period of Bankruptcy may be extended to 5-8 years if you refuse to cooperate with your Trustee. This rule will remain unchanged.

When will the one-year bankruptcy bill become effective?

Officially, the one-year bankruptcy discharge will become effective 6 months after the Bill receives royal assent. The experts at Revive Financial believe this could take approximately 6 months. This will give trustees time to prepare any objections. It will also give relevant agencies time to consider whether it’s appropriate for their cases.

One year bankruptcy and beyond

People with unmanageable debt will have diminished stigma and repercussions associated with Bankruptcy. This will leave you free to begin new business ventures and move on with your life. If you have unmanageable debt and are considering bankruptcy, or would like to further discuss the implications of this new bill, contact our experts at 1800 534 534 today.

For more information on bankruptcy, check out our bankruptcy page here

Is-Your-Business-In-Financial-Distress

Topics: Bankruptcy, Personal Debt

How Can We Assist You Today?

Business Debt Icon Business
Personal Debt Icon Personal
Please select an assistance option to continue.

Types Of Unsecured Debts

Credit Card Icon Credit/Store Cards
Personal Loan Icon Personal Loan
Pay Day Loan Icon Pay Day Loan
Tax Debt Icon Tax Debt
Disconnected Utilities Icon Utility Bill
Other Debts Icon Other
Please select at least one type of unsecured debt.

Your Business Structure

Sole Trader Icon Sole Trader
Partnership Icon Partnership
Company Icon Pty Ltd Company
Tax Debt Icon Trust
Please select at business structure to continue.

Unsecured Debt Amount

$8,000
$1,000
$100,000+

Business Debt Amount

$100,000
$10,000
$1,000,000+

Take Back Control Today!

First Name

Last Name

Email

Phone Number

Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678)

Post Code

Post code must be 4-digits long (e.g. 4567)

Some of your details appear incorrect.
Please update the highlighted fields and re-submit.

Congratulations

You’ve taken the first step to steer your business back to viability

Let’s keep the momentum going, take the second step by linking your Xero account now.

Congratulations

You've taken the first step to becoming debt free

Let's keep the momentum going, take the second step now and complete the assessment form.

By submitting this form you acknowledge that you have read and accept our Privacy Policy