The proposed one-year bankruptcy

Is faster better?

On 19 October 2017, the Bankruptcy Amendment (Enterprise Incentives) Bill was introduced to parliament proposing reduction of the term of bankruptcy to one year.

The concept of a one-year bankruptcy is not a new one. The Bankruptcy Act 1966 previously allowed discharge after 12 months at the bankruptcy trustee's discretion, called "early discharge".

According to the explanatory memorandum to the Bankruptcy Legislation Amendment Bill 2002, early discharge was scrapped because:

The reduced period of bankruptcy is seen to discourage debtors from trying to enter formal or informal arrangements with their creditors to settle debts, and provides little opportunity for debtors to become better financial managers.