TaxPersonal TaxInsolvency Service gets tough on bankrupts

Insolvency Service gets tough on bankrupts

The new bankruptcy regime finally showed its teeth this week with the issue of the first 'Bankruptcy Restriction', as new figures showed the number of people going bust continues to soar.

Link: Christmas fears as bankruptcy soars again

Bankruptcy Restriction Orders (BROs) or Undertakings (BRUs), which aim to target irresponsible, reckless or dishonest bankrupts by extending the period of bankruptcy for up to 15 years, have been the Insolvency Service’s first line of defence against charges that its new regime is ‘soft’.

Mavis Doreen Williams, of Birkenhead, agreed to the imposition of a six-year BRU after she was found to have deliberately incurred debts she had no prospect of repaying.

The news signals a warning to borrowers who try to take advantage of changes introduced in April under the Enterprise Act, which reduce the period of bankruptcy from three years to less than 12 months.

It comes just days after the DTI’s quarterly insolvency statistics prompted renewed accusations that the regime introduced in April is a soft touch.

During the past three months 9,156 people filed for bankruptcy, representing a massive increase of almost 30% on the previous year.

John Alexander, head of insolvency at Carter Backer Winter, said: ‘The results are evidence that many people’s fears regarding new insolvency laws have indeed come true.’

But Desmond Flynn, chief executive of the Insolvency Service, said: ‘Dishonest or blameworthy individuals will be identified, and restrictions sought in order to protect potential creditors from losses and act as a deterrent to others.’

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