Should Bankruptcy In The UK Be Reformed?
I read where some MP’s want to reform the insolvency and bankruptcy laws as they feel they are unfair to business and those self-employed. They want to propose a newish type of bankruptcy modeled after a Chapter 11 bankruptcy in America.
Chapter 11 bankruptcy in America is a form of bankruptcy for businesses. It basically gives them protection from their creditors, and allows them 12 months to restructure or reorganise the business so that it is profitable again.
Here in the UK we don’t really have anything like that. A LTD company could look into a CVA
or company voluntary arrangement, which is similar to an IVA
but for companies. Sole-traders can do an IVA or even a debt management plan in some instances.
I am unsure if another form of bankruptcy for businesses would really address any issues. But it did get me thinking about how easy bankruptcy is here in the UK. Compared to many other countries bankruptcy here in the UK is a cake walk.
In ROI if you bankrupt, you can be that way for years and years. Plus no bank account, and any other unpleasantries.
ROI is looking into changing and updating their insolvency laws, and are using the UK’s laws as a model. They are looking at a few changes and adjustments, but it would be similar to bankruptcy and other forms of insolvency, such as an IVA or DRO
, here in the UK.
People actually look to move here to the UK just to go bankrupt. It isn’t as easy as just moving here, but it can be easier than going bankrupt in many other countries. You need to establish residency here, and also show the majority of your interests here in the UK. This can be working here, paying taxes, banking, etc.
And another interesting thing about bankruptcy in the UK, is that as we are a part of the EU, in some matters, you can include debts in the EU in a bankruptcy here in the UK.
This does help many people who not just move here and have debts abroad, but also UK residents who may have property abroad and it has been repossessed, or the person can no longer afford it.
The secured loan cannot be included, but any shortfall from a repossession, in the EU or UK, can be included in a bankruptcy.
So for a few good reasons, insolvency being one of them, the UK is a good place to live...and go bankrupt.