Bankruptcy 'should be last resort'

Planned changes to bankruptcy could help those who are suffering from money management problems, it has been claimed.

Proposals to change the bankruptcy process should prove to be of benefit to those struggling with credit cards and other aspects of personal finance, it has been suggested.

Attorney-general Robert McClelland points out that with more than 34,000 people declared bankrupt over the course of the last financial year, there has been concern that too many creditors are using bankruptcy as a tool in order to recover the money they are owed instead of as a last resort, the Australian Associated Press reports.

As such, the government is now looking to increase the threshold for a creditor to attempt to declare someone bankrupt from $2,000 to $10,000. The Australian banking moves could also see the timeframe between an application for bankruptcy and the time that assets can be taken extended.

Mr McClelland also points out that the need for those struggling with money to acknowledge their problems and seek out guidance at an early stage.

He adds that while there are those who are guilty of credit card abuse, many people are in major money problems through no fault of their own, for instance through illness or losing their job.

Such comments come after the Australian Securities and Investments Commission recently issued guidance to credit lenders about the need to treat their customers fairly, as well as not sending out unsolicited cards.

Written by Mark Hornby