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THE LAW AND INSOLVENCY
Page 33
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The first bankruptcy act was introduced in 1542, when bankrupts were seen as criminals and once described as 'crafty debtors cheating the realm'. The act governing modern-day financial difficulties is the 1986 Insolvency Act, which allowed for a bankrupt to be discharged from their debts after three years. The act provides for the Official Receiver or an insolvency pracftoner to sell your assets, sometimes including your home, and manage your earnings for the prescribed period to make sure that as many of your debts as possible are paid off. After that period, you can start afresh with a clean sheet.
• The 2002 Enterprise Act changed the length of time a person could be bankrupt to one year with certain exceptions. It could be a shorter period if the Official Receiver files in court that their investigations are complete. It could, however last as long as 15 years if an individual or firm is found to be particularly culpable for their bankruptcy.
• Staff who work for a firm that has been wound up can initially claim unpaid wages from the Government under the 1996 Employment Relations Act. The amount the Government will pay is capped at £330 a week. The Government will then act as a creditor against the company, but staff can also be a creditor for any sum over the £330 a week that remains owing to them. 1