The bill proposes a higher debt threshold.
The Ministry of Law (MinLaw) has submitted amendments to current bankruptcy legislation in a bid to create a "more rehabilitative" environment for insolvents.
The proposed amendments include a higher bankruptcy debt threshold, or the minimum debt amount that needs to be owed before a person may be made bankrupt. The threshold will be increased from $10,000 to $15,000.
"This change seeks to encourage both debtors and creditors to resolve debts falling below the threshold, without resorting to the formal bankruptcy process. This will help such debtors avoid the inconveniences and social stigma associated with bankruptcy," noted MinLaw in a statement.
The amendments also inclide mandated "exit points" for bankruptcy, which will allow insolvent debtors to be discharged after a set amount of time.
First-time bankrupts will generally be eligible for discharge in five to seven years. Repeat bankrupts will generally be eligible for discharge in seven to nine years.
A bankrupt’s eligibility for discharge will depend on his paying a “Target Contribution”. The Target Contribution is determined based on the bankrupt’s earning potential.
"This differentiated discharge framework will create a more rehabilitative regime, giving bankrupts clear timeframes and the incentive to seek gainful employment as a means of achieving their discharge," MinLaw stated.
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