Reforms to the bankruptcy system

Submission Date: 3 November 2026

The Insolvency and Restructuring Committee of the Law Council of Australia’s Business Law Section (the Committee) welcomes the opportunity to provide a submission in response to the exposure draft and explanatory materials released by the Treasury on proposed changes to Australia’s personal insolvency system.

The submission sets out four proposed reforms to the Bankruptcy Act 1966 (Cth) and the personal insolvency system more generally:

1. an increase to the bankruptcy threshold from $10,000 to $20,000 and index it over time;
2. an increase to the timeframe a debtor has to respond to a Bankruptcy Notice from 21 days to 28 days;
3. amending the Bankruptcy Act so that an ‘act of bankruptcy’ is not taken to have occurred where a debtor submits a debt agreement proposal to the Official Receiver, or where a debt agreement proposal is accepted by creditors; and
4. a reduction in the period of time for which a discharged bankrupt is recorded on the National Personal Insolvency Index.

Prior submission

The Committee refers to its prior submission to the personal insolvency consultation provided to the Attorney General’s Department on 6 October 2023.¹ The Committee suggests that the Treasury review that submission in conjunction with this submission as the questions posited at that time are almost identical.

^{1 Law Council of Australia Personal Insolvency Consultation (Submission, 6 October 2023).}

Last Updated on 04/11/2026

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