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Bankruptcy may be streamlined 22 January 2010
Steven Jackson (about the author)

The Insolvency Service is seeking views on a proposal to allow debtors to file for bankruptcy online or by post, as part of a consultation.

The regulator’s proposals include an option that would allow debtors, who have no prospect of ever repaying, to avoid having to wait for a court slot and the Insolvency Service is asking for submissions to be made before the 8 February deadline.

It is just one of the proposals under discussion in the consultation, entitled Reforming Debtor Petition Bankruptcy and Early Discharge from Bankruptcy, which looks at ways of streamlining the bankruptcy application process for debtors.

It also recommends that the bankruptcy order based on petitions by the debtor would no longer be made by a judge. Instead, orders will be made by an official appointed by the secretary of state, leaving the courts to deal with matters requiring judicial input and dispute resolution.

Steve Jackson of BeatMyDebt.com welcomed the proposals. "One of the main reasons which puts off people off bankruptcy when it is clearly the right solution for them is the fear of having to go to court in person" he said.  

Reducing delay to the bankrutpcy process

The Insolvency Service wants to reduce delays while also freeing up court time and resources to deal with other aspects of insolvency.

The proposals build on research which found that in some parts of England and Wales, debtors faced delays of up to three months between first contacting the court, to the making of the bankruptcy order. If petitions are sent to a secretary of state-appointed official, the Insolvency Service believes the waiting times could be reduced.

The official will consider each online and postal bankruptcy application, carrying out rigorous checks of the information to make sure that the applicant meets the criteria for bankruptcy, before providing the applicant with a decision.

Other key proposals include the government continuing to encourage debtors to seek professional advice about debt relief by using prompts and pop ups during the online application process. There will also be a telephone support line to help people complete the application form.

The application form will set out the serious nature of bankruptcy and its consequences, and applicants will have to confirm they have read and understood this clearly.

Under the proposal an applicant would be able to withdraw the application any time before a decision is made.

The government is also proposing to remove the discretionary ability which allows an official receiver to grant an early discharge from bankruptcy before the usual 12-month period.

Source: Credit Today