UK bankruptcy regulations could worsen the credit crunch
The lax rules on bankruptcy could allow the credit crunch to spiral out of control as Britons take on greater debt risks
The relaxed bankruptcy regulations that are available in the UK could be
taking their toll on the credit crunch, it was reported in
The
Times.
Current bankruptcy rules state that bankrupts can be discharged within a
year, instead of the previous three, and apply for credit once more.
There have been calls from the National Institute of Economic and Social
Research for international cooperation, in order to crack down on bankruptcy
regulation.
However, Martin Weale, director of the institute, finds that the relaxed
attitude towards bankruptcy will mean consumers will take excessive risks. ‘This
Government has done its best to make things worse’ he said.
Currently in the USA, bankruptcy and mortgage rules allow debtors to wipe
their debt clean without any penalty.
The insolvency first quarter results which show the amount of Individual
Voluntary Arrangements and Bankruptcy figures are released today.
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