Sole traders and businesses operating as a partnership are being offered temporary protection during the COVID-19 pandemic.
To reduce the financial stress, the Australian Government has temporarily changed bankruptcy laws to protect people who are facing unmanageable debts to help them stay afloat in this difficult period, rather than face insolvency or mandatory closure.
This means that you can apply for temporary debt protection for up to six months, preventing recovery action by unsecured creditors.
Over the six month period, the ATO suggests people in financial trouble use the time to seek free advice from a financial counsellor, negotiate plans with creditors and consider and seek advice about insolvency.
Also, the minimum amount of debt that can trigger bankruptcy has changed from $5,000 to $20,000 and you now have up to six months to respond to a bankruptcy notice, instead of 21 days.
For more help, advice can be obtained from the National Debt Helpline by calling 1800 007 007.