Bankruptcy Act amendment

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 (and select option 6) or via our enquiry form.

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

This statement was updated on 22 December.

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 and select option 6 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.