These articles gives a general overview only and the legal position at the time of writing them. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print.
Part II Enterprise Act 2002: Reforms to Personal Insolvency
The Enterprise Act 2002 ("the Act") reforms relating to personal insolvency are likely to be introduced after April 2004. A brief overview of the changes to come are:
Duration of Bankruptcy:
In most case individuals will be discharged from bankruptcy no later than 12 months after commencement. The Official Receiver may file a notice at Court, effecting earlier discharge once his investigations are completed or if thought unnecessary.
Bankruptcy Restriction Orders:
Whilst the aim of the Act is to liberalise the existing bankruptcy regime, certain 'culpable' bankrupts whose conduct is such that some Court sanction is thought appropriate, will be subjected to a new restriction regime - the bankruptcy restriction order. The effect of such an order is to extend the bankruptcy period for a period between 2 and 15 years. The procedure will be similar to the Company Directors Disqualification Act proceedings and agreed undertakings may be given replacing the need for a hearing.
Bankrupts interest in principal residence:
To counter the perceived injustice the Act introduces a provision that the trustee in bankruptcy must take steps to realise the bankrupt's interest in the principal residence of the bankrupt, bankrupt's spouse or former spouse within 3 years (calculated from the date of the bankruptcy) otherwise it will cease to form part of the bankrupts estate and automatically revert back to the bankrupt. However, if the trustee in bankruptcy's interest is below a certain prescribed value (yet to be determined) proceedings will be dismissed. During Parliamentary debate it was made clear that proceedings should be dismissed if the return is only likely to cover professional fees.
Individual Voluntary Arrangement (IVA):
To encourage greater debtor rehabilitation and better returns for creditors a new procedure is introduced to encourage bankrupts to enter into IVA's post bankruptcy. The IVA will be run by the Official Receiver who will put the bankrupt's proposals to the creditors. The creditors will have option to either accept or reject the proposals. If accepted the bankruptcy order will be annulled.
Revised Income Payment Order:
The bankrupt will continue to make payments where his or her income exceeds that required for his and his family's reasonable needs after discharge for a period of up to 3 years in total from the commencement of the date of bankruptcy. Income payment agreement may be entered into which will avoid the need for a hearing.
Bankruptcy restriction amendments:
The restrictions on bankrupt's holding certain public offices have been liberalised. Again in a further attempt to reduce stigma of bankruptcy.
This article gives a general overview only and the legal position at the time of writing this article. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print. For further information and advice, please contact Marianne Johns on 0800 135 7917 or alternatively by email on Marianne.Johns@lemon-co.co.uk.
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The Enterprise Act 2002 (the Act) reforms relating to personal insolvency are likely to be introduced after April 2004...</p>
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