Insolvency Service plans bankruptcy overhaul

16/11/2009

New proposals to reduce the role played by courts in the bankruptcy system as a whole have been unveiled by The Insolvency Service.

The organisation has published a new consultation document, which contains plans to allow debtors to apply for their own bankruptcy through an "administrative process" rather than going through a court.

According to The Insolvency Service, this move would improve efficiency by reducing the time it takes between an individual application and the order itself being issued.

Costs for debtors, who currently have to pay courts £510 due to the bankruptcy process, could also be reduced.

The Insolvency Service's consultation will run until February next year.

Kevin Still, director of debt solution provider EuroDebt, commented: "The bankruptcy figures over the last two years have remained fairly constant with regard to the proportion of bankruptcies where it is the debtor that petitioned for their own bankruptcy. This figure stands at around 87% of all bankruptcies in England & Wales. IVAs remain slightly more popular in terms of formal debt solutions.

"Debt Management Plans dwarf these figures. If the delays at the court are reduced then this will be a major step forward, though we will wait and see whether the new process is less costly for consumers with unmanageable debt problems."

The consultation document follows the release of statistics from The Insolvency Service showing that around 21,500 debtors managed to get some or all of their bankruptcy fees reduced over the 2008-09 financial year.

Tags; Income Worries and Debt, Credit Card Lifestyle,

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