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Attorney-General, Christian Porter, has recently said in a statement that the use of Debt Agreement Proposals ("DAPs") to avoid bankruptcy is in need of reform.
The number of DAPs filed increased from 6,500 in 2007 to 12,640 in 2017 (an increase of 48.58% or nearly 5% per annum) with bankruptcies during the same period decreasing almost 10,000 per year.
The reforms currently being discussed include introducing new payment-to-income ratios and doubling the asset threshold at which debtors can acess a DAP. Mr Porter said following the introduction of the legislation to the House of Representatives that this was the 1st major reform since 2007 and was in direct response to DAPs providers exploiting consumers. Mr Porter said in a statement, "It will boost confidence in the professionalism of debt agreement administrators, deter unscrupulous practices and enhance transparency. Secondly we are bolstering the authority of the official receiver in bankruptcy to intervene in exceptional cases and refuse to accept debt agreement proposals which would cause undue financial hardship to vulnerable debtors".
Should the legislation be passed through Parliament the debt agreement industry would have 6 months in which to implement any of the proposed changes.
Source: 9 News - February 2018