The Association of Buisness Recovery Professionals known as ‘R3’ has reported that 58% of the population believe that bankruptcy restrictions should last longer than a year. Understandably consumers attitudes towards bankruptcy and bankrupts has stiffened in the economic climate with the vast majority of people believing people take advantage of the bankruptcy system, by specifically using it to write off their debt. Furthermore people think bankrupts should be treated differently according to their pre-bankruptcy spending ‘habits’, and could have avoided bankruptcy by curbing their reckless spending.
‘Our bankruptcy regime, lasting only a year, is quite lenient compared to other countries. While no-one is advocating a return to the ‘debtor’s prison’, there is a strong feeling that a debtor’s spending behaviour should be factored into the length of the term of bankruptcy. Perhaps fuelled by stories of celebrity debtors, there is support for a move to distinguish the genuine hardship case from the reckless spender.’ says R3 President Lee Manning “Currently, the actual term of bankruptcy cannot be extended for reasons of reckless or blameworthy behaviour prior to bankruptcy. Although a Bankruptcy Restrictions Order (BRO) can be imposed to extend the restrictions of bankruptcy for between 2 and 15 years for culpable behaviour, a BRO does not increase the bankruptcy term. This means that any assets acquired by a reckless spender after their 12 month term of bankruptcy, even where they are subject to a BRO, can be retained by that individual rather than helping towards paying back their debts. Only by extending the term of bankruptcy, not just the restrictions, can we really hope to deter reckless spending.”
Lee Manning concluded:
“Those who struggle to make ends meet, using credit cards to bridge the gap, or who are considering a payday loan, will have to make some financial sacrifices in order to avoid their debts spiraling out of control and leading to a potential bankruptcy. Our research also indicated a tougher bankruptcy regime would make people more cautious with their spending, although too late to address today’s consumer debt problem. In the meantime, seeking professional advice as soon as possible is the best remedy for concerns over debt.”