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Plans To Make The Bankruptcy Process Easier Should Be Encouraged
The Insolvency Service is currently considering whether the bankruptcy application process can be made simpler and quicker. The current system involves attending a court hearing where a judge decides whether the bankruptcy should be granted. In new proposals, the Insolvency Service have suggested that the requirement to attend court should be abolished and bankruptcy orders should be made by an appointed official following a formula similar to that of the debt relief order which was introduce in 2009. The Institute of Credit Management (ICM) say that this proposed change will make bankruptcy too easy and allow people to avoid paying their debt. However, this is just simply not the case. The problem for many with the current system is two-fold: Firstly the cost is prohibitive The cost of declaring bankruptcy is currently £510 per person. This barrier prevents many people from declaring bankruptcy when it is clearly the right solution for them. The introduction of Debt Relief Orders (DRO) has gone some way to help in this area. However, a DRO can only be used if total debt is less than £15,000 and assets are less than £300. These barriers prevent many from using the DRO process. Secondly the delay in getting a court appointment Many county courts are so busy that individuals have to wait up to three months for an appointment with a district judge. This is in nobody’s interest, particularly the individual who is struggling with the stress of debt and daily harassment from collectors. It seems that the system in the High Court in London has already overcome the second problem. To cater for the sheer volume of applications, it is now highly unusual for an individual declaring bankruptcy in the High Court to have a face to face meeting with a Judge at all. The documents are processed by a clerk, checked by a judge and the bankruptcy order is made. This does not seem to be a vastly different system to that proposed by the Insolvency Service. The effects of Bankruptcy will not become any easier In their haste to dismiss the proposals, I believe that the ICM have missed an important point. The Insolvency Service’s idea is simply to streamline the process of granting a bankruptcy order. Once an individual is declared bankrupt, they will still be required to meet with the official receiver (OR). The OR will continue to protect the interest of the creditors by introducing an income payment order and distributing assets to creditors where appropriate. For this reason, if the proposals are introduced, they will simply enable people who need to deal with their debt through the bankruptcy process to do so more quickly and at less cost. Once bankrupt, the individual will not be treated any differently or allowed to make less of their obligations. The fact remains that the number of people suffering with serious debt in England and Wales is on the increase. For many, bankruptcy is the best way to resolve this problem. If they are prevented from doing so simply because of cost and process, then changes are required. However, bankruptcy is and should remain a very serious undertaking. If you are thinking of declaring bankruptcy it is vital that you get expert advice before going down this route. Article Directory: http://www.articledashboard.com Steve Jackson is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Personal Debt Solutions, visit our website at www.beatmydebt.com |
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