As from April 6th this year the Insolvency Service has removed the mandatory requirement to advertise someone’s bankruptcy in the local paper. Instead it is now, with certain exceptions, left to the discretion of the Official Receiver to decide whether an advertisement is necessary.

Previously, all those that went bankrupt had their name, home address and last known occupation placed in an advert in their local paper. 

The reason that the insolvency rules required that certain events and information to be publicised, was to allow creditors of an insolvent the opportunity to claim in the proceedings or to allow interested parties in an insolvency an opportunity to attend a meeting, for example, the publication of the making of an insolvency order, or the publication of the venue of a meeting of creditors. These adverts will generally have appeared in both the London Gazette, an official journal in the UK in which certain statutory notices are required to be published, and in the local newspaper of the bankrupt. 

However New Rules, (The Insolvency (Amendment) Rules 2009), which came into force on 6 April 2009 allow discretion in the matter of whether advertisement is necessary, it now being required only where 

• there has not been a full disclosure i.e. there is significant asset, liability or conduct information or where the advertisement might have the effect of bringing the proceedings to the attention of the absent director or bankrupt or,  
• there has been a high level of complaint or public concern, perhaps where the official receiver is receiving calls from individual customers or (ex) employees of the company, who are unsure as to the status of the insolvent.

Consequently where the date of presentation of the petition was on or after the 6 April 2009, for most straightforward personal bankruptcy petitions, where the honest consumer has cooperated with the Official Receiver and made full disclosure, there will be no need for an advert in the local press. This should relieve the petitioner of part of the stigma attached to bankruptcy and in addition there will be the considerable cost saving, estimated around £600, of not placing an advert in the Public notices section of the local paper. (In cases where the order was made on a petition presented before that date, the provisions of the ‘old’ Rules will continue to apply).

More details on this can be found at insolvency.gov.uk   

Debtwizard comment 

This came in on April 6th but only a very few organisations, such as the usual debt charities and Insolvency Practitioners who usually act as Trustees examining a bankrupt's estate are aware of the change. Jo Public does not know about it, not even the media, and it concerned me immensely that members of the public have not been made aware of this incredible change of policy.

Consequently I wrote to the Insolvency Service to ask why this was not made public knowledge back in April this year and I am pleased to say that I have had a very positive response from them. They have now invited me to their Stakeholder Conference on Insolvency Rules Modernisation on the 14 October 2009 and have also asked me for suggestions on how they should provide further publicity for the new insolvency advertising regime to reach individuals who are considering personal insolvency.

Although this is great news for the honest consumer who needs to go bankrupt it is a well known fact that this mandatory requirement to advertise their impending insolvency has deterred many from petitioning for bankruptcy, even though this would have been their best option. My job now is to let the consumer know of this massive change in policy.

Some will argue that we need to have publicity in all cases of bankruptcy and that this change of policy is making it too easy for those in debt. I disagree as I see some of the pain and suffering of those who have lost control and the ability to repay. Instead they are plagued by debt collectors and harassed to pay monies they do not have, they become ill, depressed and often turn to alcohol, crime or gambling. 

One wonders whether if it is some of those that can pay their debts who are the ones having a problem in accepting that the stigma of bankruptcy is fast disappearing and that a different view of bankruptcy will be taken in future.

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