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'Malicious' bankruptcies set to rise with new online application process?

Published on 6 Apr 2010 under category: legal

Plans for a new online system for bankruptcy applications could place undue pressure on those applying, according to an industry body.

R3, the organisation for insolvency practitioners, has warned that the new proposals could result in hasty or opportunistic bankruptcies.

It could also see a new trend in "malicious" bankruptcies if online checks are not sufficient, where individuals, such as disgruntled spouses, apply for bankruptcy in someone else's name.

Peter Sargent, president of R3, said: "There should be scope for the Court to use their expertise to root out abuses in the system which may go unnoticed under the new system. It's hard to identify these intricate abuses as it is - reducing the oversight of the Court just increases the chance that they will go undiscovered and unpunished."

Those facing serious debt problems may find themselves caving into pressure from bailiffs or applying simply because they have not considered alternatives or gathered professional advice.

Eliminating the middle man in the process means that some people may go through with the procedure without understanding its implications, according to R3.

It proposes that the government add a "cooling off" period after application, so that individuals can consider the decision they have made.

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.