Australia’s Department of Treasury has launched a consultation on draft amendments to the Bankruptcy Act 1966 that would double the minimum debt threshold for involuntary bankruptcy, give debtors more time to respond to bankruptcy notices and remove debt agreement proposals and acceptances as acts of bankruptcy. The draft implements three priority reforms previously announced in July 2024. The minimum debt threshold would rise from AUD 10,000 to AUD 20,000 from July 1, 2027, with annual indexation linked to the Consumer Price Index beginning July 1, 2028. Indexed amounts would be rounded to the nearest AUD 1,000, with AUD 500 rounded down, and could not fall below the previous financial year’s threshold. The higher minimum would prevent creditors from forcing debtors into bankruptcy for debts below that amount and encourage alternative insolvency options for smaller debts. Debtors would have 28 days rather than 21 days to respond to a bankruptcy notice, allowing more time to obtain advice. Proposing or accepting a debt agreement would no longer constitute an act of bankruptcy, removing a potential deterrent to using that alternative. A separate consultation is planned on the remaining priority reform, which would shorten the period during which the public can search for a discharged bankrupt’s details on the National Personal Insolvency Index.
Australia’s Department of Treasury consults on doubling involuntary bankruptcy threshold to AUD 20,000
Australia’s Department of Treasury is consulting on proposals to raise the involuntary bankruptcy threshold from AUD 10,000 to AUD 20,000 from July 1, 2027, followed by annual indexation from July 1, 2028. The draft would also extend the response period for bankruptcy notices from 21 to 28 days and stop debt agreement proposals and acceptances from constituting acts of bankruptcy. A further consultation is planned on reducing public access periods for discharged bankrupts’ details.