Higher Education Funding Act 1988

This section applies in relation to a bankruptcy if:

before the bankrupt’s bankruptcy date, the bankrupt incurred:

an accumulated HEC debt; or

a semester debt or semester debts; or

both; and

that debt or those debts had not been discharged before the bankruptcy date.

Subject to subsection (5), the following are taken to be provable debts for the purposes of the Bankruptcy Act:

the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt;

the unpaid part of the semester debt, or of each of the semester debts.

An accumulated HEC debt and a semester debt can be discharged and replaced by a new accumulated HEC debt through the operation of sections 106N and 106O.

If an accumulated HEC debt, or a semester debt that the bankrupt incurred before the bankrupt’s bankruptcy date, is discharged and replaced in this way:

it ceases to be a provable debt; and

subsections (6) and (7) of this section can apply to the new accumulated HEC debt; and

for that purpose, a pre‑bankruptcy part for the bankrupt’s new accumulated HEC debt is calculated under subsections (8) and (9).

To avoid doubt, the following are taken not to be provable debts for the purposes of the Bankruptcy Act:

the bankrupt’s accumulated HEC debt (apart from the pre‑bankruptcy part of that debt);

any semester debt incurred by the bankrupt on or after the bankrupt’s bankruptcy date.

A dividend paid under the Bankruptcy Act to the Commonwealth in respect of:

the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt; or

a semester debt mentioned in subsection (1);

Section 153 of the Bankruptcy Act does not operate to release the bankrupt from the following:

all or any part of the accumulated HEC debt;

a semester debt mentioned in subsection (1).

If:

subsections (2) to (5) apply to an accumulated HEC debt (the old HEC debt) of the bankrupt (including because of a previous application of this subsection or subsection (7)); and

the old HEC debt is discharged under section 106O because the bankrupt incurred another accumulated HEC debt (the replacement HEC debt) under section 106N;

after the replacement HEC debt is incurred, those subsections apply (subject to any later application of this subsection) to the replacement HEC debt instead of the old HEC debt; and

for that purpose:

a proof of debt under the Bankruptcy Act in relation to the pre‑bankruptcy part of the old HEC debt (including because of a previous application of this subsection or subsection (7)) is taken to relate, to the extent of that proof, to the pre‑bankruptcy part of the replacement HEC debt; and

if at the time the old HEC debt is discharged under section 106O, a semester debt of the bankrupt is also discharged under that section—a proof of debt under the Bankruptcy Act in relation to the semester debt is taken to relate, to the extent of that proof, to the pre‑bankruptcy part of the replacement HEC debt.

If:

immediately before the bankrupt’s bankruptcy date, the bankrupt had:

one or more undischarged semester debts (an old semester debt); and

no undischarged accumulated HEC debt; and

on or after the bankruptcy date, the unpaid part of an old semester debt is discharged under section 106O because the bankrupt incurred an accumulated HEC debt (the new HEC debt) under section 106N;

after the new HEC debt is incurred, subsections (2) to (5) apply (subject to any later application of subsection (6)) to the new HEC debt instead of the old semester debt; and

for that purpose, a proof of debt under the Bankruptcy Act in relation to the old semester debt is taken to relate to the pre‑bankruptcy part of the new HEC debt.

Subject to subsection (9), the pre‑bankruptcy part of a bankrupt’s accumulated HEC debt is the amount that would be the bankrupt’s relevant debt calculated in accordance with subsections 106Q(2) and (3), if:

that amount was calculated as at the time immediately before the bankrupt’s bankruptcy date; and

the reference in paragraph 106Q(2)(a) to the person’s accumulated HEC debt referred to in paragraph (1)(b) were a reference to the person’s accumulated HEC debt on the 1 June immediately preceding the bankruptcy date.

If:

immediately before the bankrupt’s bankruptcy date, the bankrupt had one or more undischarged semester debts; and

at a time (the discharge time) on or after the bankruptcy date, the unpaid part of those debts (the discharged amount) was discharged because of the operation of section 106O;

if the bankrupt did not have an accumulated HEC debt immediately before the discharge time—the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt is equal to the discharged amount; or

otherwise—the pre‑bankruptcy part of the bankrupt’s accumulated HEC debt is taken to be increased at the discharge time by an amount equal to the discharged amount.

In this section: