Bill aims to help bankrupts
Debt-affected Pilbara property and business owners suffering in the wake of the end of the mining boom could be some of the biggest winners if new legislation is passed relating to bankruptcy.
A Bill amending the Bankruptcy Act, introduced into Federal Parliament last month, would reduce the term people would be subject to bankruptcy from the current three years to only 12 months, and is expected to make debts easier to dissolve and banks more willing to negotiate alternatives to bankruptcy.
Karratha-based financial adviser, Financial Services managing director Mark Hayes, said the legislative change would be especially welcome in the Pilbara where the number of people in financial hardship to the point of considering bankruptcy was above the national average and “more . . . than what you might think”.
“It will give people an opportunity to recover much more quickly,” he said of the legislation.
“We have a high level of bankruptcies in the Pilbara and . . . the two main reasons are property prices falling and small businesses struggling.”
However, Mr Hayes noted creditors could suffer under the changes and businesses would have to keep suppliers on a “short lease” to mitigate the risk of not being paid.
WA Insolvency Solutions partner Chris Williamson said the amendment was part of a trend towards bankruptcy becoming more accepted, especially in the Pilbara where the mining downturn had taken its toll.
“The numbers are increasing and the stigma that used to be there many years ago really isn’t there because there’s so many things that have happened,” he said.
“You look at the markets here in Karratha with the property — who foresaw that the property was going to fall by the values that it did?”