Bankruptcy Act amendment

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Bill to amend Bankruptcy Act

The Australian Government has amended the Bankruptcy Act 1966 (Cth) to provide greater certainty on the calculation of bankruptcy discharge dates.

The new legislation, Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 (Cth), came into force on Thursday 23 November 2023.

Below please find:

Public Statement 23 November 2023 - Bankruptcy Amendment commenced

The Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 commenced as a law of the Commonwealth on Thursday 23 November 2023. ...

The Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 commenced as a law of the Commonwealth on Thursday 23 November 2023.

The legislation provides legal certainty on the calculation of bankruptcy discharge dates for individuals who are or have been bankrupt, creditors and trustees. It aligns the Bankruptcy Act 1966 (Cth) and regulations with Australian Financial Security Authority (AFSA) practice dating back to 1992.

The new legislation applies prospectively and retrospectively. It:

  • confirms the date a person is discharged from bankruptcy is three years and one day after either:
    • their Debtor's Petition is accepted, or
    • in the case of involuntary bankruptcies, the date that an accepted Statement of Affairs has been filed.
  • provides certainty to individuals and the personal insolvency system by affirming the way bankruptcy discharge dates have been calculated for over 30 years.
  • validates former and current discharge dates and confirms past decision making made on the basis of those dates.
  • ensures both the Official Trustee and registered trustees can continue to administer bankruptcies with certainty and minimal disruption for people who are bankrupt and their creditors.

If a person believes they were wrongfully convicted of a crime due to a mistaken understanding that they were bankrupt at a particular time, the legislation does not restrict their ability to challenge their conviction.

AFSA is committed to maintaining the integrity of Australia’s personal insolvency system and doing all it can to deliver services that support certainty and respond to the needs of all its stakeholders.

Over the coming weeks we will be taking steps to notify affected people of the amended legislation and will continue our program of engagement with stakeholders.

If anyone has any questions, concerns or complaints regarding the new legislation they can contact AFSA on 1300 364 785 or via our enquiry form.

Media Enquiries: media@afsa.gov.au or phone 0408 105 665.

This statement was updated on 22 December.

Public Statement 15 November 2023 - Bankruptcy Amendment Bill introduced to Parliament

A Bill to amend bankruptcy legislation to provide legal certainty on the calculation of bankruptcy discharge dates was introduced into Parliament on 14 November 2023. ...

A Bill to amend bankruptcy legislation to provide legal certainty on the calculation of bankruptcy discharge dates was introduced into Parliament on 14 November 2023.

The Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 (the Bill) will align the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) with current practice. It will confirm that the date a person is discharged from bankruptcy is three years and one day after their Statement of Affairs is accepted.

Why the change?

The amendment has been introduced to address an issue with the way the Australian Financial Security Authority (AFSA) calculates automatic discharge dates. AFSA became aware of this issue through a privately litigated court case which was settled in 2022.

The court case identified that AFSA’s administrative processes associated with the lodgement of a key bankruptcy document, the Statement of Affairs, did not align with the Bankruptcy Act.

The effect of this was that, when the filing (e.g. presentation or lodgement) date of a Statement of Affairs was different to the date AFSA accepted the Statement of Affairs, a person’s discharge date from bankruptcy was later than it should have been.

AFSA sincerely apologises to those affected for the historical misidentification of filing dates of statements of affairs under the Bankruptcy Act 1966 (Cth).

Background

The Statement of Affairs outlines a person’s financial circumstances and provides information essential for a trustee to administer a person’s bankruptcy.

Under the Bankruptcy Act, a person becomes discharged from bankruptcy three years and one day after their Statement of Affairs is filed.

Since 1992, it has been the practice of AFSA and its predecessors to link the filing date of a Statement of Affairs to when it was accepted, rather than the date it was initially presented.

While in most cases the presentation and acceptance dates are the same, in some instances the acceptance date can be later than the presentation date.

What does the Bill do?

Passage of the Bill will validate current practice and confirm the filing date as the date a Statement of Affairs is accepted. It also means that there will be no change to any former or current discharge dates.

This will ensure both the Official Trustee and Registered Trustees can continue to administer bankruptcies with certainty and minimal disruption for people who are bankrupt or have been bankrupt, and their creditors. AFSA is working closely with its industry stakeholders and financial counsellors to brief them on the matter and keep them updated.

Assistance with enquiries and complaints

AFSA recognises that bankruptcy affects individuals at a time when they are navigating truly complex and challenging circumstances. We apologise for any additional stress this information may cause.

For trustees and those working in the personal insolvency system, we acknowledge that this may lead to a period of uncertainty and apologise for any inconvenience.

If anyone has concerns about how this may affect them, they can: contact AFSA on 1300 364 785 or via our enquiry form to ask questions, make a complaint or request further information.

AFSA is committed to maintaining the integrity of Australia’s personal insolvency system and doing all it can to deliver services that support certainty and respond to the needs of all its stakeholders.

Media Enquiries: media@afsa.gov.au or phone 0408 105 665.

Frequently asked questions: General

Why is this happening?

This new legislation addresses a long-standing (30-year old) issue and provides greater certainty on the calculation of bankruptcy discharge dates.

It delivers legal certainty for everyone who engages in the personal insolvency system, in particular for people who are or have been bankrupt, creditors, trustees and financial counsellors.

What does the legislation do?

The legislation aligns the Bankruptcy Act 1966 (Cth) with longstanding AFSA practice. It confirms the date a person is discharged from bankruptcy is three years and one day after either:

  • their Debtor's Petition is accepted, or
  • in the case of involuntary bankruptcies, the date that an accepted Statement of Affairs has been filed.

It ensures bankruptcies continue to be administered with certainty and minimal disruption for people that are bankrupt and their creditors.

What does this mean for people who are currently bankrupt?

There will be no impact on current bankruptcies. Nothing is changing for people experiencing bankruptcy and no action from them is required.

We recognise that bankruptcy affects people at a time when they are navigating truly complex and challenging circumstances. We apologise for any additional stress this information may cause.

If you have any concerns please call us on 1300 364 785 or fill out our online enquiry form.

Please also see the Further Information section below where there are links to relevant support services, should you wish to seek any additional advice.

What does this mean for people who have been discharged from bankruptcy?

There will be no impact on previous bankruptcies. Nothing is changing for people who have been discharged from bankruptcy and no action from them is required.

We recognise that bankruptcy affects people at a time when they are navigating truly complex and challenging circumstances. We apologise for any stress this information may cause.

If you have any concerns please call us on 1300 364 785 or fill out our online enquiry form.

Please also see the Further Information section below where there are links to relevant support services, should you wish to seek any additional advice.

What does this mean for creditors?

The legislation delivers legal certainty for creditors on the calculation of discharge dates. Nothing will change for creditors and no action from them is required.

If you have any concerns please call us on 1300 364 785 or fill out our online enquiry form.

What is AFSA doing in relation to the legislation?

AFSA:

  • Is notifying affected people of the amended legislation via email or post.
  • Has set up a dedicated webpage, enquiry form and call centre channel to facilitate questions and requests for further information.
  • Is working closely with its industry stakeholders to brief them on the matter and keep them updated.
  • Continues to review and update its systems and processes to meet the evolving needs of bankruptcy applicants.
I received an email or letter from AFSA about changes to the Bankruptcy Act. Is this a scam?

We are sending emails and letters to our clients who are currently or have previously been bankrupt, and whose acceptance date of their Statement of Affairs was later than the date it was filed with AFSA.

Our correspondence provides information only and does not ask you to reply or provide personal information.

Beware of AFSA impersonation scams 

If you’re not sure whether it’s really us, do not click on any links.

You can call us on 1300 364 785, if you have any concerns.

Further information about scams please visit Australian Competition & Consumer Commission ScamWatch.

I haven’t received an email or a letter from AFSA. What should I do?

AFSA is only contacting people who may have had a difference in the date a Statement of Affairs was presented and accepted by AFSA. You will only receive an email or a letter if you are in this category.

If your contact details have changed, please contact AFSA on 1300 364 785 to update your details.

My question isn’t here. Where can I go for help?

You can complete an enquiry form on our website or contact our call centre on 1300 364 785.

Please also see the Further Information section below where there are links to relevant support services, should you wish to seek any additional advice.

Frequently asked questions: Personal Insolvency Industry

What impact will this have on those working in the personal insolvency system?

The legislation delivers legal certainty to the insolvency industry by validating a process adopted by AFSA and its predecessors since 1992.

The legislation is both retrospective and prospective. The legislation aligns the Bankruptcy Act with current practice. It confirms the date a person is discharged from bankruptcy is three years and one day after either:

  • their Statement of Affairs is accepted, or
  • in the case of involuntary bankruptcies, the date that an adequate Statement of Affairs has been filed.

It ensures both the Official Trustee and Registered Trustees can continue to administer bankruptcies with certainty and minimal disruption for people who are bankrupt or have been bankrupt, and their creditors.

It also ensures that any relevant actions that have been taken by a Registered Trustee or the Official Trustee in the administration of an estate where there was a risk of uncertainty are deemed valid and lawful.

What effect will it have on our clients?

The legislation is retrospective and prospective so the way that bankruptcies are administered stay the same.

The legislation validates all discharge dates for people who are or have been bankrupt and no action is required from them.

If you or your clients have any concerns or questions these can be responded to by calling us on 1300 364 785 or completing our online enquiry form.

I’ve been contacted by a client who received an email or letter from AFSA about the Bankruptcy Amendment. What should I do?

Please feel free to refer your clients to AFSA so we can assist them. They can:

What if my client hasn’t received an email or a letter?

AFSA is only contacting people who may have had a difference in the date a Statement of Affairs was presented and accepted by AFSA. Your client will only receive an email or a letter if they are in this category.

My client has submitted their Statement of Affairs to AFSA. When will a decision be made?

The 2023 amendment to the Bankruptcy Act and Regulations introduced requirements for the Official Receiver (OR) to make an initial decision on whether a Statement of Affairs should be accepted or refused within 14 days of it being received by AFSA.

We are taking a considered approach to ensure decisions comply with legislation, and this may result in an adjustment of our standard processing times. We will seek to process applications as quickly as possible, and we will provide an initial decision within the 14 day timeframe.

Where can I find out more?

You can complete an enquiry form on our website or phone 1300 364 785.

Trustees, financial counsellors and others working in insolvency may also wish to contact their professional associations.

Frequently asked questions: National Personal Insolvency Index (NPII)

What is the NPII disclaimer?

On 16 November 2023, a disclaimer was placed on the front page of the Bankruptcy Register Search and on all affected records while the Bill was being considered by Parliament. The Bill commenced as law on 23 November 2023 and the disclaimer was removed. A message confirming the effect of the amendment remains on the NPII, entries have been validated and no action is required.

Why was there a disclaimer?

While the Bill was being considered, we were not able to ensure the accuracy of some of the fields on the NPII that relate to the date of discharge for some bankruptcies. The commencement of the Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 (Cth) means that the disclaimer can be removed.

Where can I find out more?

For assistance with NPII extracts for affected bankruptcies, or if you would like more information, you can complete an enquiry form on our website or phone 1300 364 785.

Further information

Enquiries and complaints

Enquiry form

T: 1300 364 785, please be ready to provide your name, contact number, and bankruptcy administration number.

Need a translator?

If you have difficulty speaking or understanding English, contact us through the Translating and Interpreting Service (TIS) - www.tisnational.gov.au 131 450 and ask for AFSA on 1300 364 785.

Support services

Information and links to a range of support services, including financial counselling, Indigenous assistance, free legal advice, mental health and wellbeing can be found on our Where to find help on managing debts page.

Commonwealth Ombudsman

The Commonwealth Ombudsman responds to complaints about the administrative actions of Government agencies, including AFSA. If you have concerns with how your bankruptcy has been handled by AFSA and are not satisfied with our response to your complaint, you can contact the Commonwealth Ombudsman for assistance.

Further information is available at www.ombudsman.gov.au or by telephone on 1300 362 072.

Compensation claims

While there is no automatic right to compensation under the Bankruptcy Act amendment, there are existing government mechanisms available to those looking to explore compensation options. These are the Compensation for Detriment caused by Defective Administration (CDDA) Scheme and Act of Grace Payments.

Applications for consideration of compensation under the CDDA Scheme can be made by completing the AFSA CDDA Application Form. More information on the CDDA Scheme, including eligibility criteria, can be found on the Commonwealth Department of Finance website.

Act of Grace Payments are administered by the Commonwealth Department of Finance. Further information, including eligibility criteria and how to apply, can be found on the Department of Finance website.