New Bankruptcy GuidelinesKoffels
New Bankruptcy Guidelines As They Relate to the Covid-19 Impact on Business and Individuals
The Australian Taxation Office regularly issues notices to assist businesses keep up to date with changes to regulations. In the time of Covid-19 especially, we feel that it is important to keep up to date with both your obligations and your rights.
Here is a recent directive from the ATO as to new parameters in Bankruptcy Regulations during the current financial stressors of the pandemic.
“The Australian Government has temporarily changed bankruptcy law to help protect people who are facing unmanageable debt as a result of the economic impacts of COVID-19.
If you’re a sole trader, or operating a business as a partnership, you could face personal bankruptcy if you can’t pay your debts.
If you’re in financial difficulty you can now apply for temporary debt protection; this prevents recovery action by unsecured creditors for six months. You can use the time to:
- seek free advice from a financial counsellor;
- negotiate payment plans with creditors; and
- consider whether you require a formal insolvency option.
In addition, the temporary debt relief measures have increased the:
- minimum amount of debt that can trigger bankruptcy (from $5,000 to $20,000);
- time an individual has to respond to a Bankruptcy Notice (from 21 days to six months).