Bankruptcy Petitions Too Costly and Too Complicated EuroDebt Welcomes Reforms
With the latest insolvency figures showing a marked reduction in the number of bankruptcies, EuroDebt Financial Services, the leading debt management solutions provider of face to face advice, is welcoming the Governmentís proposals to cut the cost and time involved in declaring bankruptcy.
Vance Parsons, Director said: "It is ironic that the cost of applying for bankruptcy is a major obstacle for many debtors in England & Wales. This has become abundantly clear in the latest insolvency figures. Any changes to the system to make the process swifter and more cost-effective must be welcomed. Certainly at EuroDebt we see many clients for whom the route to bankruptcy has been long and unnecessarily tortuous. This just adds to the stress these individuals are already facing."
In the consultation announced by Ed Davey on 7th November, the Insolvency Service sets out proposals that aim to provide the most appropriate and efficient route into bankruptcy and winding up, and to ensure that the Court's focus is on dispute resolution.
It is proposed that uncontested applications, even where brought by a creditor, would be determined in a more streamlined way by an Adjudicator, making use of a new pre-action process. The proposals recognise the vital role the Court has to play where there is a dispute between the parties, but aims to encourage debtor and creditor to engage at an early stage wherever possible to resolve debt issues.
Richard Gardiner of Thomson Cooper, Affiliate Member of the Association of Professional Debt Solution Intermediaries (APDSI), says "The proposals would see England and Wales more closely aligned to the Scottish system where debtor applications no longer go through a court process. The indebted simply fills in an application form and sends it off to the Accountant in Bankruptcy (AIB) with £100. The barriers to enter bankruptcy have also been reduced and effectively all that is needed is an authorised person to sign a "certificate of sequestration" saying that the debtor is insolvent."
Anthony Sharp, FICM adds: "These proposals have been debated for a few years now and it would be good to see some action. One of the issues the proposals would address is that each Bankruptcy Court appears to deal with bankruptcies in a different way. Removing it from the Court process could make sense.
"There is no doubt that individuals who genuinely need bankruptcy as a solution to their severe debt problems find the present fees and deposit a great deterrent. Anything to make this easier and less costly should be welcomed. It is also worth considering the proposal for payment of the fee by instalments, on the basis that bankruptcy will only be considered when the whole fee has been paid, just like the Debt Relief Order (DRO) position today."
"As with everything in the debt arena, there needs to be a proper balance between the rights of the creditor and the rights of the consumer."
The consultation closes on the 31st January 2012.