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'Rules are too lax'.

MORE than half the Yorkshire population believes bankruptcy should last longer than a year, according to research by insolvency trade body R3.

As attitudes towards bankruptcy harden, 87% of those polled in the region believe that some people take advantage of the bankruptcy system to write off their debts which they built up through reckless spending.

Nearly two thirds of respondents in Yorkshire think that bankrupts should be treated differently according to their prior spending behaviour and most could avoid bankruptcy by reining in reckless spending.

Chris Wood, Yorkshire R3 committee member and partner at Clough Corporate Solutions in Cleckheaton, said: "Our bankruptcy regime, lasting only a year, is quite lenient compared to other countries.

"While no-one is advocating a return to the 'debtor's prison', there is a strong feeling that a debtor's spending behaviour should be factored into the length of the term of bankruptcy.

"Perhaps fuelled by stories of celebrity debtors, there is support for a move to distinguish the genuine hardship case from the reckless spender."

Said Mr Wood: "Currently, the actual term of bankruptcy cannot be extended for reasons of reckless or blameworthy behaviour prior to bankruptcy.

"Although a Bankruptcy Restrictions Order can be imposed to extend the restrictions of bankruptcy for between two and 15 years for culpable behaviour, a BRO does not increase the bankruptcy term.

This means that any assets acquired by a reckless spender after their 12 month term of bankruptcy, even where they are subject to a BRO, can be retained by that individual rather than helping towards paying back their debts. Only by extending the term of bankruptcy, not just the restrictions, can we really hope to deter reckless spending."

The survey findings come at a time when 55% of the Yorkshire population worry about their current levels of debt and 56% struggle to make it to payday each month.

Nationally, 4m adults say they are likely to seek a payday loan in the next six months, the highest level recorded by R3.

CAPTION(S):

* TOUGH STANCE: Chris Wood, Yorkshire vice-chairman of R3
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Title Annotation:Business
Publication:Huddersfield Daily Examiner (Huddersfield, England)
Date:Jul 24, 2012
Words:343
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