A modernised bankruptcy law is now in the offing as the Senate passed a legislation today that reduces to $5000 the minimum amount required for a creditor to file a petition for insolvency.

The Senate initiative was in reaction to recent spikes in numbers of Australian being caught in financial quagmire and according to the federal government, personal bankruptcies jumped by 11 percent last financial year with most non-business incidents involving consumer debt.

While the new legislation would reduce the amount required for bankruptcy filing from $10,000 to $5000, it would also ensure that the value of bankrupt estates would not be diminished by fees charged for any attending administration.

Parliamentary secretary Ursula Stephens of the Labour party lauded the coalition for supporting the bill as she told the parliament that the new measures would "provide debtors with overwhelming debts a realistic opportunity to obtain advice and consider all options before contemplating bankruptcy."

The new legislation, now known as the Bankruptcy Legislation Amendment Bill 2009, would be forwarded back to the lower house, where the government is expected to muster the sufficient numbers to waive through possible amendments to the bill.