The Government made a commitment in its 2001 election manifesto to reform insolvency laws to ensure second chances for people who go bankrupt through "no fault of their own".

The White Paper on insolvency reform was launched in July 2001 and the proposals were contained in part 10 of the Enterprise Bill published on 26 March 2002.

The Government's aim is to strike a balance between the need to protect the public and commercial community while not discouraging enterprise and entrepreneurship.

They claim this can be done by distinguishing between those who have failed through no fault of their own and those whose situation has arisen though irresponsible behaviour.

For those bankrupts who have failed through no fault of their own, the recommendations include automatic discharge reduced to 12 months rather than 3 years and the reduction of restrictions imposed.

Government Departments are reviewing the current restrictions bankrupts are subject to, to see whether they should be removed or retained on public interest grounds.

Bankrupts deemed irresponsible will have to comply with Bankruptcy Restriction Orders for up to 15 years in order to provide improved protection for creditors and the public.

Full details on the Government proposals can be found on the Insolvency Service website.