Bankruptcy - personal
Last reviewed 21/07/2008: any recent updates in this colour.
The new rules on personal insolvency brought in under the Enterprise Act 2002 came into effect on 1 April 2004.
The rules are intended to stimulate enterprise by removing some of the barriers to entrepreneurial risk taking, including reducing the stigma of bankruptcy.
The key changes include the following:
- Most bankrupts will be automatically discharged after twelve months or less unless they are judged "culpable".
- Culpable bankrupts may be made subject to bankruptcy restriction orders (BROs) that may last for 2-15 years.
- The principal residence of a bankrupt will revert back to the bankrupt after three years if steps have not been taken to realise his/her interest in the property at that point.
- Individuals are encouraged to make individual voluntary arrangements (IVAs) with creditors with the official receiver putting proposals to creditors and supervising arrangements.
Further information about the reforms can be found on the Insolvency Service website.
