One-click bankruptcy sparks concern

Moves to open up insolvency methods ­ called debt relief orders ­ will mean individuals could begin bankruptcy proceedings for themselves or others online. There are concerns individuals may use the scheme against people they have a grudge against.

Mike Gerrard, insolvency partner at Grant Thornton, believes people may ‘get sloshed’ and think it is a ‘good idea to start bankruptcy proceedings’. ‘One of my concerns is that you don’t have to go to court, you could actually make someone like your old headmaster bankrupt. No-one will know until they receive a letter,’ he said.

Although the policy will reduce the burden on courts and costs the debtor £100 compared to the current £500 to file proceedings, there is a fear that personal insolvency will be taken too lightly.

The Insolvency Service is currently working on the plans, expected to be introduced in April 2009.