Early discharge provisions from bankruptcy are repealed

Why has the Insolvency Act 1986 (IA 1986) been amended to repeal the provisions that allowed for the early discharge from bankruptcy? We have a quick look to think about why.

Original news

Coming into force on 1 October 2013, the Insolvency (Amendment) Rules 2013 (SI: 2013/2135) has repealed the early discharge from bankruptcy provisions under IA 1986, s 279. As from 1 October 2013, the earliest a bankrupt will be able to be discharged from bankruptcy will be on the first anniversary of the bankruptcy order.

Why have these changes been made?

These changes have been made for two reasons:

  1. it was hoped early discharge would help promote rehabilitation and reduce the stigma attached to bankruptcy—however, subsequent evaluation shows this provision did not help bankrupts obtain better credit or gain other advantages, but involved extra cost; and
  2. the prior provisions introduced considerable financial and administrative burden into the bankruptcy case administration process, to no particular end—it costs businesses time and money in dealing with early discharge notices and, as a result, was rarely used.

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