New Debt Agreement Reforms – What are the Changes?
In September, the government introduced the Bankruptcy Amendment (Debt Agreement Reform) Bill 2018. For individuals struggling financially, debt agreements are a significant and popular alternative to personal bankruptcy. This legislation aims to make the debt agreement system fairer and more accessible, enhancing the process for both debtors and creditors. It also aims to protect the financially vulnerable from potential exploitation.
The reforms include changes to various aspects of debt agreements, including:
The length of time that a debtor can propose a debt agreement be limited to 3 years unless they own property in which case it can be 5 years;
The amount offered to creditors under the debt agreement be set as a percentage of their income to make the debt agreement more affordable;
The voting rules for creditors;
The registration requirements for debt agreement administrators; and
The investigative and inquiry powers of the Inspector-General.
These amendments aim to set professional practices and boost confidence in industry standards by tightening the regulation of debt agreement regimes. This reforms also sees the introduction of tougher penalties for wrongdoing. This enhances transparency between the registered debt agreement administrator and stakeholders and ensure that the debt agreement system is accessible and equitable.
The majority of the amendments will commence on 27 June 2019.
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