| Proposed Amendments To The Bankruptcy Act - Period Of Bankruptcy - News Article 07/08/09
The Attorney-General’s Department has recently released a discussion paper with some more proposed changes to the Bankruptcy Act. One of the proposed amendments is that the period of bankruptcy be a 'maximum' of 12 months for first time bankrupts - with the possibility of early discharge.
It is proposed that second or subsequent bankruptcies would last for a longer period - but the length of that longer period is not yet disclosed. The reason for this is stated as to recognise that the bankrupt could be expected to learn how to avoid bankruptcy a second time. Becoming bankrupt would certainly be a learning experience for most people, and the vast majority of bankrupts never become bankrupt again.
The reason behind reducing the period of first time bankrupts is that the Government believes a maximum of 12 months is considered more than adequate for the trustee to obtain all the information necessary to identify assets and debts, determine any possible liability to make income contributions and develop a plan to administer the estate. Where these investigations are concluded sooner, the bankrupt should be entitled to a discharge.
It is correct that the majority of bankrupts don’t need to be bankrupt for 3 years. There is no benefit to creditors for the longer period, the estate or in the public interest. Uncooperative bankrupts can still have their periods extended. It seems that income contributions to creditors would be paid over longer periods – probably the original 3 years and so this won’t be helped at all if the person stays a bankrupt.
Once the legislation comes into operation, I will come back to this topic.