Lenders will be allowed to stop repaying debts if they receive a court order under plans outlined in a radical government consultation released yesterday.

The paper, issued by the Ministry of Justice, will allow individuals who fall into financial difficulty, such as loss of employment, to stop paying off loans, credit cards and other debts if successfully applying for an 'enforcement restriction order'.

The Times reports that the proposals mark the biggest overhaul of personal insolvency laws for years at a time when banks are preparing themselves for heavy losses from bad debts.

Civil justice minister Bridget Prentice said the government wanted to allow people who had run up debts 'every opportunity' to pay them off.

Further reading:

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Darling to overhaul bank insolvency rules