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The federal government is contemplating major reforms of bankruptcy laws as it prepares for a surge in personal insolvencies off the back of the economic downturn.
Current reforms under consideration by the government include raising the minimum debt for a creditor’s petition to put a debtor into bankruptcy from $2,000 to $10,000 as well as reducing the maximum bankruptcy period from three to one years in the case of first time bankrupts, The Australian Financial Review reported today.
The government is also considering whether the National Personal Insolvency Index should remain a public record.
Personal insolvencies were up by 12 per cent in the first half of the financial year, compared to the previous one.
The recent March quarter saw 9,300 bankruptcies declared, compared to 7,865, in the same quarter in 2008. The June quarter is expected to be even worse.
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