Online bankruptcy plan 'presents serious risks'

Tuesday, April 6th 2010

An insolvency trade body has warned that allowing people to apply for bankruptcy online could bring "serious risks".

R3 claims that the system could see pressurised, impulsive and malicious bankruptcies.

The latter fear refers to cases where individuals apply for bankruptcy in another person's name.

President of R3 Peter Sargent cautions that there are "dramatic consequences" to bankruptcy.

"It's important that people receive proper professional advice before the process begins so they understand what it entails and are aware of the alternative options available to them," he added.

Under the government's proposals, Britons can apply for the status with an almost immediate effect.

While he supports the aim to speed-up the process, Mr Sargent recommends a period where people can reflect on their decision before it takes effect.

R3 - the Association of Business Recovery Professionals - encourages best practice among those who work with firms and individuals facing financial difficulties.