Government News Index
Govt targets bankruptcy
AAP
21mar02
THE Federal Government has abandoned a planned cooling-off period while moving to target people who deliberately use bankruptcy to avoid paying debts
Attorney-General Daryl Williams said the new laws introduced today were aimed at balancing the interests of debtors and creditors and would also stop people from walking away from hefty credit card debts.
The changes, he said, would encourage people to think more carefully about bankruptcy and erase concerns it was seen as an easy escape.
"Bankruptcy is designed to give people in severe financial difficulty relief, as a measure of last resort, from overwhelming debts," he told parliament.
The laws replaced a package of legislation abandoned when parliament was dissolved for last year's federal election.
But Mr Williams said the government decided to do away with a proposed cooling off period which would have forced people wanting to declare bankruptcy to consider their decision for 30 days.
Mr Williams said the decision had been taken because of a sharp rise in the number of debt agreements, introduced in 1996 as an alternative to bankruptcy for people with low incomes and relatively low levels of debt.
"The government sees this as clear evidence that increasingly people in financial difficulties are considering and choosing debt agreements as alternatives to bankruptcy," he said.
Key changes will included strengthened powers for official receivers to reject bankruptcy applications when it appeared a person could afford to pay debts and was seeking to abuse the system.
As well, trustees will be able to object to the standard discharge from bankruptcy after three years when the person involved had been uncooperative.
Courts would also be given greater powers to annul a bankruptcy if it appeared the initial application had been an abuse of process.
Debate on the bills was adjourned.