Bankruptcy in Australia - Changes that help Small Business and Entrepreneurs

Do you know how much Bankruptcy  Australia is changing? The Australian Government at the end of 2015 suggested some underlying changes to the Bankruptcy Laws in Australia. One of the most significant of these is the length of time that a person is bankrupt for. Now, there is a minimum amount of time that you must stay bankrupt, however, this 3 year period may very well be reduced down to just 12 months. So if you are asking about Bankruptcy, this news may be pretty important to you.

Mark Carnegie in the Financial Review on the 7th December 2015 suggested 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 defending family assets was essential because "banks just terrorise small business and the mental health consequences to society are enormous".

The problem is Australia's bankruptcy laws prevented 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 around this Bankruptcy issue in Australia that some come up with is that this revision will only push fraudulent behavior opening pandora's box in a manner of speaking for the unscrupulous to violation of the bankruptcy system. We have looked into the minimum, but on the other side of the problem, The government is not proposing to change the maximum term of 8 years if it deems a bankrupt has acted in an unethical or fraudulent way, and there are no plans to change the consequences of misrepresenting yourself or financial position when filing for bankruptcy in Australia.

As an insolvency professional in Australia, I have a fair share of practical experience when it concerns Bankruptcy. And having dealt with thousands of 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, each week I help a small business owner or entrepreneur undergo the very problematic task of bankruptcy, not once have I really felt they are happy about it. The average small business owner or entrepreneur in Australia does not start out taking enormous financial risks with the intent to fail. The media prefers citing the apparent wrongdoing that will be rampant if these changes occur, what a joke!

A Win for Small Business

These suggested changes will be good for often the best and brightest in Australia not get tossed out of the game financially for financial decisions often out of their control. Most small business owners I help with Bankruptcy, are hardworking, tax paying, managers keeping this country going.

There really is a fine line with what exactly the government is trying to do here, because they are attempting to balance helping people who have made decisions out of their control, and discouraging people from making missteps that land them in trouble and consequently an issue of Bankruptcy. However you likewise don't want to destroy 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 project that has not worked out.

At the big end of town large well-known 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 decreased because directors are troubled they'll be personally accountable in an insolvency arrangement if the new plan doesn't work out.

The government's suggested 'safe haven' modifications for directors of companies will allow Australia to more fully explore and innovate, which will make big changes for Bankruptcy. I cannot imagine, that these changes will be detrimental to Australia's economy, actually 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 enormous. When it comes to Bankruptcy in Australia not a day passes where I don't find out 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 really need some assistance with your debts in Australia or are just thinking of Bankruptcy, feel free to call us here at Fresh Start Solutions on 1300 818 575, or visit our website: freshstartsolutions.com.au