Bankruptcy Reform in UK

The British government has released a paper, "Bankruptcy—A Fresh Start" that has caused considerable concern to managers of firms extending credit in the UK. The major change proposed is to shorten the discharge period from three years to six months for "good" bankrupts. Creditors are concerned that the change would cause consumers to be more willing to file bankruptcy to shed their debts. A particularly thorny issue is which government agency would sort the "goods" from the "bads." Government officials are arguing that the proposal is designed to stimulate entrepreneurial activities and to keep funds flowing into the economy, However, at least one creditor in the UK has suggested that the proposal is designed to redistribute wealth. Discussions in various journals from the UK suggest that it will be awhile before the proposals are enacted.