Business News - Bankruptcy Cheat Crackdown

In recent years the DTI has shown an increase in people declaring themselves as insolvent. In 2000 the number of applications for bankruptcy was 12,757, in 2003 this had increased to 19,296. Part of the reason for this was that in 2002 the discharge period was cut from three years to one. During this period an individual that has declared themselves as bankrupt cannot open bank accounts, acquire credit cards or enter into other similar financial agreements.

Whilst the change in the law was intended to encourage entrepreneurs by removing the stigma attached to bankruptcy, it now appears that it has encouraged people to use bankruptcy as a way out. People with large debts have started to use bankruptcy as a way of avoiding debt repayment and creditors.
The government are now looking at irresponsible bankrupts and using legislation to increase the discharge period by up to 15 years. These restrictions will be imposed more frequently and it is planned to make them public.

It is also proposed to make it easier for creditors to set up repayment plans. This procedure is called an Individual Voluntary Arrangement and is intended to make it easier for insolvent people to make repayments.
31/01/2005