New Bankruptcy Law – 1st April 2004
What Does the New Bankruptcy Law Involve?
A new bankruptcy law – introduced by the Enterprise Act 2002 – will be introduced on 1st April 2004. The intention is to help remove the shame of bankruptcy from genuine cases and further penalise delinquent bankrupts.
The standard period of bankruptcy is to be reduced to 12 months – those that are already bankrupt after 1st April 2004 may also have their period reduced. If a bankrupt’s discharge date currently falls after 1st April 2005, they will be discharged on this date. In the meantime, if the discharge date is before 1st April 2005, it will remain the same.
However, the above law will not apply to bankrupts who have previously been bankrupt. Such bankrupts may apply to the Court to be discharged five years after the latest bankruptcy order.
The automatic restrictions imposed on ALL bankrupts are also to be removed. These restrictions can be imposed on delinquent bankrupts under a Bankruptcy Administration Order.
After a bankrupt has been discharged, they will be encouraged to start over again with the help of their creditors who may offer more flexible credit terms (through negotiation).
A county court judgement (CCJ) will remain registered for the period of six years regardless of whether the debt has been fully paid off within this period. However, a note will be added to the record if the debt is paid off. The CCJ will be aware to all creditors for the duration.
Why the Change?
The Government comments that “most creditors would run a mile from an individual who had been bankrupt in the past”. The new law will therefore make it easier for the “honest” bankrupt and will give them a chance to rebuild their business and run it successfully after being discharged. Once the bankrupt has been discharged, creditors will no longer be aware of the bankruptcy and will not “run that mile” when the individual seeks credit.
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