The new bankruptcy laws, which were rushed into law on November 25, 2005, just before the defeat of the Liberal government on November 28, 2005, will not come into force until June 30, 2006 at the earliest. The Senate was promised the opportunity to review the legislation and hear the scores of experts and special interest groups who were scheduled to make submissions. There is the hope that this flawed legislation will not be enacted without significant changes.
First-time bankrupts who have surplus income:
The law passed on November 25, 2005, states that in accordance with directives issued by the Superintendent of Bankruptcy, first-time bankrupts with surplus income will be required to make payments for nine months. If, at the end of the nine-month period, the surplus remains, the bankrupt will be required to make additional payments for a further 12 months and for a further time as the Court may order.
I dislike this change for two reasons:
1. The change is not required because there is already a system in place to require debtors with excess income to file a proposal, if it is the trustee’s opinion that the person could have made a viable proposal. (Sections: 170.1(2) (c) and 173 (n). Directives: No. 6R, Section 16 and No. 12, Sections: 4 and 5).
2. This change carries the same flaws as all formula based procedures:
• It substitutes inflexibility in place of the human factor;
• It treats all people the same regardless of extenuating circumstances;
• It makes no use of the training, experience and high ethical standards of professional trustees in bankruptcy.
Recommendation:
That this change be removed.
The Report of the Senate Committee on Banking, Trade and Commerce November, 2003, recommended this change be adopted with the priviso that trustees should have the discretion to permit a shorter contribution period in cases of undue hardship.