Do you know how
much Bankruptcy Australia is
changing? The Australian Government in late 2015 put up some foundational
changes to the Bankruptcy Laws in Australia. The most significant of these is
the length of time that a person is bankrupt for. At the moment, there is a
minimum amount of time that you must remain bankrupt, having said that, this 3
year period may very well be reduced to just 12 months. So if you are inquiring
about Bankruptcy, this news may be rather important to you.
Mark Carnegie in
the Financial Review on the 7th December 2015 recommended that "the
proposed changes to ease the burden of bankruptcy laws didn't go far enough and
the government should adopt US-style laws to protect the family home".
These shifts to
the issue of Bankruptcy will take 18 months to implement. Mr Carnegie, went on
to say in the Financial Review that giving protection to family assets was
important because "banks just terrorise small business and the mental
health consequences to society are enormous".
The problem is
Australia's bankruptcy laws put off investors from supporting start-ups, and
therefore mentoring had been "driven out of the system".
"They
naturally find it very intimidating themselves personally and with their assets
at risk in a risky early-stage deal, but with their own money in the deal and a
lightened-up provision I think we 'd probably see more willingness. It could be
more important than the money."
Fraudulent Behavior
The debate about
this Bankruptcy issue in Australia that some make is that this change will only
invite fraudulent behavior opening pandora's box so to speak for the
unscrupulous to maltreatment of the bankruptcy system. We have looked at the
minimum, but on the other side of the problem, The government is not submitting
to change the maximum term of 8 years if it deems a bankrupt has represented
oneself in an unethical or fraudulent way, and there are no proposals to change
the outcomes of misrepresenting yourself or financial position when filing for
bankruptcy in Australia.
As an insolvency
professional in Australia, I have a reasonable share of experience when it
comes to Bankruptcy. And having dealt with countless bankruptcy cases in
Australia I have never caught someone abusing the system or acting in an
immoral way as to exploit the insolvency laws in Australia. When it comes to Bankruptcy,
every week I help a small business owner or entrepreneur suffer through the
very difficult task of bankruptcy, not once have I thought they are happy about
it. The typical small business owner or entrepreneur in Australia does not
start out taking enormous financial risks with the intention to fail. The media
really loves citing the apparent abuse that will be rampant if these changes
occur, what a joke!
A Win for Small Business
These
recommended changes will be good for often the best and brightest in Australia
not get tossed out of the game financially for financial decisions often
outside of their control. Most small business owners I help with Bankruptcy,
are hardworking, tax paying, employers keeping this country going.
There certainly
is a fine line with what the government is trying to do here, because they are
attempting to balance helping people who have made decisions out of their
control, and deterring people from making oversights that land them in trouble
and as a result an issue of Bankruptcy. However you likewise don't want to wipe
out the experience and knowledge that business owners have. You surely don't
want to shatter people simply because they have had a genuine failure in a
large or small start-up venture that has not panned out.
At the big end
of town large established companies have long been criticised for their failure
to innovate - lets face it they would be more likely to do so if the risks of
insolvency were minimized because directors are troubled they'll be personally
responsible in an insolvency arrangement if the new project doesn't work out.
The government's
proposed 'safe haven' changes for directors of companies will enable Australia
to more fully explore and innovate, which will make big changes for Bankruptcy.
I can not imagine, that these adjustments will be damaging to Australia's
economy, in fact these bankruptcy laws will save the tax payer in all areas of
health - Especially in the mental health sector because the emotional cost of
bankruptcy is extensive. When it comes to Bankruptcy in Australia not a day
goes by where I don't hear the tragic stories of relationship failures,
thoughts of suicide and the list goes on.
Bankruptcy helps
save lives, and it could save yours. If you want some help with your debts in
Australia or are just considering Bankruptcy, feel free to call us here at
Bankruptcy Experts Australia on 1300 795 575, or visit our website: bankruptcyexpertsaustralia.com.au
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