Proposals to allow individuals to submit a bankruptcy application online or by post have been outlined by the government, in a bid to make the process of obtaining a bankruptcy order possible without going to court.
According to the Department for Business, Innovation and Skills (BIS) and the Insolvency Service, the new rules – put forward in a report entitled ‘Consultation on Reforming Debtor Petition Bankruptcy’ – will allow people who are overwhelmed by debts to go bankrupt within days rather than weeks.
The proposed changes follow earlier consultation carried out by the government, and also builds on research conducted in 2007 by the Insolvency Service and the courts. These studies found that in some parts of England and Wales, debtors faced delays of up to three months between first contacting the court and the final order for bankruptcy being made.
If the suggested reforms come into force, debtors will be able to file their petitions for bankruptcy directly to decision-makers, rather than having to wait for an available court date. Decision-makers will be appointed by the Secretary of State.
Decision-makers will consider each online or postal bankruptcy petition they receive, carrying out checks on the information provided to ensure that applicants meet the criteria for bankruptcy. Individuals petitioning for bankruptcy will then be provided with a decision on their application.
Under the proposals outlined by the government, people applying for bankruptcy online or by post will be encouraged to seek professional debt advice via the use of online pop-up windows and information printed on the paper application form.
It says that the application form will set out the serious nature of bankruptcy and the consequences that result from it, and applicants will have to confirm they have read and understood this before their petitions for bankruptcy can be processed.
Which? debt expert Martyn Saville commented: ‘In theory, streamlining the bankruptcy process should help individuals who are struggling with unmanageable debt, enabling them to sort out their financial position sooner and without the additional stress of appearing in court.
‘The danger comes if debtors apply for bankruptcy online or by post without first seeking independent advice from reputable organisations offering their services for free, such as the Consumer Credit Counselling Service or National Debtline.
‘Automating the process too much could cut out a vital level of support and leave alternative avenues unexplored, so it’s vital that safeguards are built into the new system.’
If you’re concerned about debt, don’t forget Which? offers free resources that could be an invaluable source of help. Our Dealing with debt guide contains advice on how to tell if your debts are slipping beyond your control, explains the options available to you if you’re in debt difficulty and features an extensive list of useful contacts.
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