Bankruptcy laws in England and Wales have changed dramatically since the introduction of the Enterprise Act 2002, which amended the Insolvency Act 1986. The new Act has made the process fairer for honest bankrupts and more stringent for reckless bankrupts. The new law has reduced the period of bankruptcy to one year and introduced tough, long term penalties for reckless or dishonest bankrupts.
Bankruptcy laws in England and Wales allow for the creditor or the debtor to petition for bankruptcy, but this should not be seen as the only option. It is often better for both the debtor and for the creditor to agree to an Individual Voluntary Arrangement or ‘IVA’. An IVA is an agreement between the creditor and the debtor drawn up by an insolvency practitioner, who will then supervise the arrangement. The insolvency practitioner will look at debts and means of repayment and prepare a report for the court; they will advise on whether or not to call a meeting of creditors and if they do, the creditors will vote on the proposal. If the proposal is agreed, the insolvency practitioner will supervise the agreement. If the debtor fails to comply with the arrangement, or it transpires that the creditors were in anyway duped into agreeing to the arrangement because of misleading or inaccurate information, then bankruptcy laws dictate that the insolvency practitioner or any creditor can petition for the debtor’s bankruptcy.
If you would like to obtain legal advice on bankruptcy laws in England and Wales, or on Individual Voluntary Arrangements, Caven can put you in touch with a local specialist Insolvency Solicitor free of charge. So, if you have any questions or would like our help in finding local Insolvency Solicitors please call us on 0800 1777 167 or complete the web-form above.