ABSTRACT

As explained in Chapter 19, there has been a long-standing tension between the view that falling into a state of insolvency is necessarily culpable and the opposing view that the debtor has sometimes merely been unfortunate. Over time, the latter view has come to prevail but, as Cork recognised, there is still a requirement that the system should not favour the debtor to such an extent that there is no incentive for debtors to meet their obligations. In 1994, the Justice report suggested1 that the combination of automatic discharge from bankruptcy and the infrequency with which income payments orders2 are sought amounted to a relaxed regime which ‘can only encourage debtors who started out as essentially honest people to repeat the process’. In April 2000, the Insolvency Service published a consultation paper (Bankruptcy – A Fresh Start) which proposed that there should be a distinction made between bankrupts on the basis of their culpability with a liberalisation of the approach taken towards non-culpable bankrupts and the introduction of a new restriction order to protect the public against dishonest and irresponsible debtors.