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News 2005 Tougher Bankruptcy Restrictions for Middlesbrough Man’s Credit Card Spending Spree 2004 2003 2002 2001 RSS feed available

Tougher Bankruptcy Restrictions for Middlesbrough Man’s Credit Card Spending Spree Colin Robert John Cliff, from Middlesbrough, has become the first person in the North East region to be subjected to tougher bankruptcy restrictions as he was found him guilty of "unreasonable extravagance", the Insolvency Service reported today. He will now be subject to bankruptcy restrictions for the next three years. Soon after losing his job last year, Mr. Cliff ran up debts of £4,284 on his new credit card. Over twenty days he used the card to pay for a holiday, clothes, accessories and to make cash withdrawals, even though he had no prospect of being able to repay what he spent. Less than six weeks later he filed his own petition for bankruptcy with his debts now standing at an estimated £13,740. Changes to the laws under the Enterprise Act 2002,which effect personal bankruptcy, came into force on the 1st April 2004. Under the new rules bankrupts are now automatically discharged after one year. However, if an Official Receiver considers the bankrupt to be dishonest or blameworthy a Bankruptcy Restriction Order (BRO) may be sought, or a Bankruptcy Restriction Undertaking (BRU) may be accepted. Under both a BRO and a BRU, the same restrictions that apply during bankruptcy can be imposed for a period of between 2 and 15 years on a bankrupt or former bankrupt, as well as some additional ones. Breaching the obligations imposed by a BRO or BRU may lead to criminal prosecution and even imprisonment. In November last year, a Birkenhead woman became the first person to be subject to a Bankruptcy Restriction Undertaking as she agreed she was guilty of "unfit conduct" in the period leading up to her bankruptcy. In accepting the BRU she became subject to bankruptcy restrictions for six years. Desmond Flynn, Insolvency Service, Inspector General and Agency Chief Executive said, "The Official Receiver will always seek to establish the reasons for any bankruptcy. During the course of those investigations, dishonest or blameworthy individuals will be identified and restrictions sought to protect potential creditors from losses and act as a deterrent to others". The number of BROs and BRUs are expected to escalate as ever-growing numbers of wantonly indebted consumers seek bankruptcy as a way of abdicating responsibility for their debts.     Published Tuesday January 18th 2005

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