Temporary changes to bankruptcy laws, introduced by the Australian Government in late March and in place for six months, are making it easier for businesses to stay afloat during the COVID-19 pandemic.

In essence, the changes are:

  • The debt threshold for creditors to apply for a Bankruptcy Notice against a debtor has been increased from $5,000 to $20,000.
  • The timeframe for a debtor to respond to a Bankruptcy Notice before a creditor can commence bankruptcy proceedings has been increased from 21 days to up to six months.
  • The temporary protection period available for debtors to prevent recovery action by unsecured creditors has increased from 21 days to six months.

The temporary protection period provides valuable time for a business to seek advice, negotiate a payment plan with creditors and/or consider options for formal insolvency if necessary. And, the good news is that it will not appear on the permanent National Personal Insolvency Index.

However, it’s important to note that once a business applies for temporary debt protection, they will be unable to apply for a further protection period for 12 months.


Secured creditors can still repossess any assets they hold a security over (such as a house under mortgage), if the business/person can’t make repayments.

Some debts, including child support, HELP debts, and fines imposed by a court will not be protected.

Creditors can still contact the person/business and take, or continue to take, action to seek payment. They may also lodge a creditor’s petition with the court to make the person/business bankrupt and can use your temporary debt protection as the basis for their application

At the conclusion of thetemporary debt protection period (six months), if the person/business does not declare bankruptcy, creditors can continue to pursue them for the debts.

Need Help?

If you have been financially impacted by Coronavirus (COVID-19), you may be eligible to receive financial assistance – see the Services Australia website Affected by coronavirus for more information.

You can obtain help from a free financial counsellor by contacting the National Debt Helpline on 1800 007 007. The National Debt Helpline also offers tree tools and resources.

Assistance for Business Success

At the Ayers Group we can help your business grow and succeed in uncertain times.

Our extensive professional services range from managing administrative and financial arrangements for contractors through to providing organisations like yours with tailored back office payroll and migration solutions.

Call on an expert from the Ayers Group today to find out more about how we can provide the resources you need, and free you up for growth and success.