The Insolvency Service is clamping down on individuals who are disposing their assets irresponsibly rather than repaying debts, according to accountancy firm Moore Stephens.
Moore Stephens’ research found there had been a 24 percent rise in the number of bankruptcy restriction orders (BROs) issued by the Insolvency Service, between March 2016 and March 2017, to crack down on the ‘dissipation of assets’.
‘Dissipation of assets’ is when an individual is considered to have unreasonably disposed of assets without regard to repaying their creditors, such as banks and credit card companies.
An example might be where the individual has chosen to spend a sum of money received from the sale of an asset, such as a car, on a holiday, rather than paying back the debt they already owe.
Moore Stephens said BROs, which increased from 78 to 97 in the year to March 2017, can be very damaging to an individual’s ability to borrow and their future business prospects. If issued with a BRO, an individual’s access to credit can be limited and they can be prevented from becoming a director of a company for up to 15 years.
Steve Ramsbottom, partner at Moore Stephens said: “Tolerance is wearing thin for debtors who shirk their duty to repay what they owe.
“Despite experiencing budget cuts in recent years, the Insolvency Service is making headway in its efforts to crack down on bad behaviour which leaves creditors out of pocket.”
He said individuals issued with a BRO must know exactly what the restrictions they face mean; breaking a BRO could result in heavy fines or a custodial sentence.