Temporary changes to Commonwealth bankruptcy legislation
On 4 March 2020, the Australian Government made changes to the Bankruptcy law as part of the economic response to the Coronavirus. These temporary changes will be in place for six months from 25 March 2020.
The temporary measures include an increase to the:
- Minimum amount of debt that can trigger bankruptcy from $5,000 to $20,000
- Amount of time an individual has to respond to a Bankruptcy Notice from 21 days to six months
- Temporary debt protection – people who submit the Temporary debt protection form will have six months relief from creditors, an increase from 21 days
The Commonwealth Government have also announced a range of other economic stimulus measures to support those who have been impacted. More information about these types of payment are available at Services Australia.
How payments from the Coronavirus Economic Response Package affect people in bankruptcy:
Economic support payments are not claimable as income or as an asset, regardless of whether payments are received before or after the date of bankruptcy.
COVID-19 supplement payments are claimable by a trustee if they were received before the date of bankruptcy and remain in the recipient’s bank account when they became bankrupt. During bankruptcy these payments are included in the after-tax income amount that determine compulsory income contributions.
We have updated relevant parts of the AFSA website to explain how these changes impact people who are bankrupt:
Can’t pay my debts section
Currently bankrupt section