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There is no single law on bankruptcy in the United Kingdom with there being one system for England And Wales , one for Northern Ireland and one for Scotland . BANKRUPTCY LAW There are two main insolvency regimes in the UK: one for England and Wales and another for Scotland. In England and Wales the vast majority of insolvencies are “bankruptcies”, and the remainder are a somewhat less onerous version of bankruptcy known as Individual Voluntary arrangements or IVAs. These two forms of insolvency have close equivalents in Scotland, where bankruptcies are known as sequestrations and the equivalent of IVAs are Protected Trust Deeds, or PTDs. In bankruptcy, an indebted individual sees his debts forgiven in return for surrendering his assets (and sometimes a limited proportion of his income). He is allowed however to retain so-called “exempt” assets such as tools-of-trade and basic necessities and the generosity of this exemption level has received much attention in the USA where it varies among states, potentially affecting bankruptcy filing rates. In general, bankruptcy is handled by a Trustee In Bankruptcy who must be either an Official Receiver (a civil servant) or a licensed Insolvency Practitioner . Following the introduction of the Enterprise Act 's bankruptcy provisions in April 2004, an England & Wales bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in Court a certificate that his investigations are complete. WHY ARE BANKRUPTCIES SOARING? Some claim that the Enterprise Act threatens massively to increase the number of bankruptcy cases. Indeed, bankruptcies have risen considerably since the change. However they were already on an upward trend, and the rise is mirrored in Scotland, where there has been no legislation change. A popular alternative explanation for the run-up in UK insolvencies is "destigmatisation" - people, it is said, are becoming less ashamed of going bankrupt. This is hard to prove, but some evidence is provided by figures showing that, increasingly, bankruptcy petitions are filed by debtors themselves, rather than their creditors. The UK average household debt-to-income ratio has risen substantially in recent years, leading some to attribute the rise in insolvencies to excessive borrowing. However, the ratio of debt repayment costs to income has remained quite low, weakening this claim. Moreover, the rise in borrowing could itself be a reflection of a lower "fear" of bankruptcy - the destigmatisation effect again. INSOLVENCY FIGURES
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