by Paul Gidley22.08.22

When Covid-19 hit, there were a lot of uncertainties we faced as humans and, as it slowly dawned on us, as business owners, employees and employers. Just over two years on from its first impact on Australia, there are a number of moving parts implemented by the government to keep our heads above water as much as possible. The results of their actions are hit and miss, and the jury is still out on how positive or negative each scheme, incentive, reform and pay-out actually was. It will be years, even decades, before we’ll have a true grasp on this. However, there is one amendment that we are still asked about today, and it’s something any taxpayer should be aware of. That is, the temporary amendment to bankruptcy laws over the Covid-19 period and some confusion about where it stands today.

What was the amendment to bankruptcy laws during Covid-19?

On 24 March 2020 the government announced temporary changes to bankruptcy laws to offer debt relief measures for those negatively affected financially from the pandemic. Whether you were infected with the virus and had to cease work, or your product or service stopped being viable under Covid-19 conditions (restrictions, social distancing, lockdown), or your workplace was affected and you lost employment, Covid hit a lot of Australian pockets. 

The amendments were made effective on 25 March 2020 for an expected six month period, and you may be familiar with some or all of them.

The changes were:

  • Creditors had an increased threshold before they were able to apply for a Bankruptcy Notice against a debtor to $20,000 (previously $5,000). 

  • Lengthened timeframe for a debtor to respond to the Bankruptcy Notice before commencement of bankruptcy proceedings from a creditor to six months (previously 21 days). 

  • Lengthened protection period for debtors to prevent recovery action by unsecured creditors up to six months (previously 21 days). 

These amendments were extended beyond six months, and ended 1 January 2021. 

But, weren’t there alternate amendments after this?


It was clear as 2021 began that Covid wasn’t over for Australians. A surge of infections crept through the states, and we found ourselves once again facing lockdown, restrictions, isolation, infection and distancing (and the financial effects they come with). 

March 2021 saw alternate amendments that are very important to know, as it can be confusing, for both creditors and debtors.

  • The minimum debt to trigger bankruptcy down from $20,000 to $10,000 (double that of the original $5000 pre-pandemic)

  • The amount of time to respond to a Bankruptcy Notice reverted to 21 days (from six months)

  • Temporary debt protection relief from creditors reverted to 21 days (from six months).

These amendments are sympathetic to both creditors and debtors as we continue to face the consequences of the pandemic, though are much more mild than the temporary measures put in place. When you’re in the thick of debt collecting and debt repayment, it can be difficult to know where the law stands and how you’re protected. 

It is also important to understand the laws around timeframes with regard to these measures; does the date of the debt occurring count, or is it the time it became overdue? What happens if you were protected under the 2020 measures, but your six month protection period extended beyond 1 January 2021? 

The answers to these questions are all specific to your circumstances, and will need a professional to walk you through to ensure the very best outcome for you.

Shaw Gidley can assist you in any way you need. Contact the Shaw Gidley team today for any questions regarding current and retrospective bankruptcy laws.