Insolvency Amendment Bill passed

A bill that prevents fraudulent debts from being written off was passed by Parliament last night, Commerce Minister Simon Power said yesterday.

The Insolvency Amendment Bill amends the Insolvency Act 2006, and ensures that the integrity of the personal insolvency process, or No Asset Procedure, is maintained by preventing people from discharging debts that were acquired fraudulently.

"The No Asset Procedure was introduced in December 2007 as an alternative to bankruptcy, and essentially writes off debts of up to $40,000 for people who are in financial difficulty," Mr Power said.

"The No Asset Procedure is there to help people who find themselves in financial distress, and who have no realisable assets, to pay off debts. It was not meant to write off debts that have been obtained fraudulently, or to reward dishonesty.

"The bill also strengthens the insolvent gift provisions. This allows gifts which have been made before bankruptcy to avoid payments to creditors, to be recovered.

"The experience of the Official Assignee has shown that it is within the two-year period leading up to a bankruptcy that most debtors shift their assets to trusts, family members, and friends, to avoid paying the debts they are responsible for.

"Any asset or money recovered will be added to the general pool of assets and funds for distribution to all the creditors, according to their pre-insolvency entitlements."

The length of time that information on No Asset Procedure debtors is retained on the public register will also be increased.

Currently, these public registers are searchable online for one year for No Asset Procedure, and seven years for bankruptcy.

No Asset Procedure debtors will now remain on the public register for a total of five years, and those debtors who have been through multiple insolvency processes will have their details permanently retained on the public register.