• Nicole Rich and Fiona Guthrie

09 February 2010Australia's bankruptcy laws are out of step with today's credit market place, write Fiona Guthrie and Nicole Rich in On Line Opinion

WHEN SUSAN (not her real name) set up an internet account for her son many years ago, she had no idea the modest Telstra account would see her nearly lose her home. Susan’s son never paid the account and, once the small debt had grown to just over $2000, Telstra’s debt collector forced Susan into bankruptcy. Once fees for the bankruptcy trustee were added, Susan – whose sole income is the carer’s pension – owed more than $23,000.

It’s precisely this sort of grossly unfair outcome that proposed reforms to Australia’s bankruptcy laws are designed to prevent, by raising the current $2000 bankruptcy threshold to a more realistic $10,000. However there is more to be done if vulnerable consumers like Susan are to be protected from the misuse of our bankruptcy system in the future...

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Nicole Rich is director of policy and campaigns at the Consumer Action Law Centre. Fiona Guthrie is the Executive Director, Australian Financial Counselling and Credit Reform Association.

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