Despite the fact that the Enterprise Act 2002 has been with us for only a few years, the Government is planning a further shake-up of the insolvency regime as a result of research reported by the Centre for Insolvency Law and Policy at Kingston University. This found that bankrupts consider that the new regime, which was intended to create alternatives to formal bankruptcy and to make the process less onerous than before, still leaves insolvent persons feeling that they had ‘few if any’ alternatives to bankruptcy.

The decision to look again at the law was influenced by the massive rise in personal insolvencies in the fourth quarter of 2005, which were up 57 per cent compared with the previous year. The most common reasons for personal insolvency are the abuse of available credit and business failure. Company insolvencies in 2005 were slightly down on last year.

The report recommends the eradication of the term ‘bankruptcy’ in cases in which the bankrupt is not culpable for the bankruptcy and recommends the division of bankruptcy into ‘business bankruptcy’ and ‘personal bankruptcy’. It also recommends that the conduct of consumer debtors (in particular lending institutions) be reappraised.

If you are worried about the level of debt you carry, taking prompt advice may enable you to avoid bankruptcy by restructuring your affairs or making an individual voluntary arrangement. If you are concerned about debt problems, contact us.