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The Personal Insolvency Landscape

Trustees in bankruptcy are concerned with the promotion of good stewardship in personal insolvency case handling.

Bankruptcy is no longer an institution geared primarily towards creditors’ interests. Most bankruptcies these days are debtor-initiated and most personal insolvencies fall out with bankruptcy. Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs) are in effect “defensive” regimes triggered by debtors and not by... creditors, often designed mainly to protect the debtors.

Account must now be taken of the Tribunal Courts and Enforcement Act 2007 which introduced the Debt Relief Order (DRO) procedure from 2009 for debtors with low income and few assets and up to £20,000 of debt. There are now more DROs put in place annually than bankruptcies, with over 30,000 DROs made each year. This bankruptcy alternative for small-scale debtors involves an out-of-court administrative procedure managed by the Official Receiver and offers a form of debt relief and protection for Debtors.

The Enterprise & Regulatory Reform Act 2013 introduced a new adjudicator system for debtor-initiated bankruptcy from April 2016 designed to provide a simpler access to the initiation of bankruptcy by debtors.

Changes brought about by the Small Business Enterprise and Employment Act 2015 are more significant. They offer wide powers for trustees in bankruptcy by seeking to shrink red tape to reduce the costs of the bankruptcy process without undermining fundamental stewardship consideration.

There are unregulated debt management plans operated in the private sector which do fall to be regulated by the Financial Conduct Authority FCA) and give the state the power under the Insolvency Act 1986 S124A to wind up debt advisory/management firms that misbehave.

If you would like to learn more please call Cox Minhas & Co on 01604 973977.

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