Economy at risk from bankruptcies

Link: OFT post puts Enterprise Bill at risk

The legislation proposes ‘soft touch’ personal insolvency measures in which people who have gone bankrupt through no fault of their own will come out of administration in one year.

As Accountancy Age went to press it was unclear whether the bill would become law in this parliamentary session as haggling continued over Tory and Liberal Democrat demands that the OFT be run by a separate chairman and chief executive.Insolvency experts have warned about the soft-touch bankruptcy proposals. They say the new measures will make for a dramatic increase in the number of personal insolvencies.

Experts have already seen a change in attitude, saying more bankrupts are now being uncooperative. ‘People don’t think debt has to be repaid. And the government’s attitude is fuelling that presumption,’ said the expert.

R3, the association of business recovery professionals said that despite easing the social stigma of bankruptcy, financial inconvenience would still remain.

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