Temporary debt relief
On 25 March 2020, the Government introduced temporary measures to support individuals and businesses during this crisis. These include:
- Six month temporary debt protection
- Changes to bankruptcy notices
- Impacts to people who are currently bankrupt
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.
If your business has been impacted, you can find more information on the business.gov.au website:
- Coronavirus information and support for business – summary of all Australian Government information and support
- Temporary relief for financially distressed businesses – temporary changes to bankruptcy and director liabilities for trading while insolvent
Six month temporary debt protection
The temporary debt protection period available for people in financial difficulty has been increased from 21 days to six months. This protection now prevents recovery action by unsecured creditors for a six month period.
You can use this time to:
- Seek advice from a free financial counsellor – contact the National Debt Helpline on 1800 007 007 or see Where to find help.
- Negotiate a payment plan with your creditors. You can do this yourself or authorise someone else to negotiate on your behalf.
- Consider if any of the formal insolvency options would be right for you – see What are my options?
Changes to bankruptcy notices
- The debt threshold required 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 has increased before a Creditor can commence bankruptcy proceedings.
What happens to Bankruptcy Notices issued before 25 March 2020?
- from 21 days to up to six months. This means that a creditor will have to wait until the six month period has
If the bankruptcy notice was issued before 25 March 2020, the debtor has 21 days to comply with the bankruptcy notice. For more information see Bankruptcy notices. These temporary measures will be available for six months.
Seek free advice from a financial counsellor
You can get help from a free financial counsellor by contacting the National Debt Helpline on 1800 007 007. Financial counsellors provide free, independent and confidential advice to help you manage your debts or negotiate with creditors.
The National Debt Helpline website also has step-by-step guides and useful information on how to deal with specific types of debts.
Impacts to people who are currently bankrupt
How will payments from the Coronavirus Economic Response Package affect people in bankruptcy?
- Economic support payments – are not claimable by your bankruptcy trustee as income or as an asset, regardless of whether you receive the payments before or after the date of bankruptcy.
- COVID-19 supplement payments – are claimable by the trustee if you receive them before the date of bankruptcy and it remains in your bank account when you become bankrupt. During bankruptcy these payments are included in your after-tax income amount. If your after-tax income exceeds a set amount, you may have to make compulsory payments. For more information see Income and employment.
More information about these types of payment are available at Services Australia.
Early access to superannuation
Should you receive payments from your superannuation under the Coronavirus Economic Response Package, there is no change to the way this payment is treated in bankruptcy.
See Is my superannuation affected? for details on what happens to your super during bankruptcy.
The Australian Taxation Office has more information about super payments on their website at Early access to your super.
Impacts to people in a Debt Agreement
What can people in an active Debt Agreement do if they are affected by the Coronavirus?
If you are in an active Debt Agreement and your circumstances have changed as a result of the Coronavirus, you can contact your debt agreement administrator to discuss your options, which may include submitting a possible variation proposal.
For example, you may request that:
- The payments you have made to date be accepted as the full payment (which would end the debt agreement)
- The debt agreement to be extended for a specific period
More information & Links
- MoneySmart.gov.au COVID-19 making financial decisions
- National Debt Helpline COVID-19 Financial survival guide
- Services Australia Affected by coronavirus
- Business.gov.au Coronavirus information and support for business
- Department of Health Coronavirus (COVID-19) health alert
- Australia.gov.au Coronavirus COVID-19 essential information
- Australian Small Business and Family Enterprise Ombudsman My business health