REGULAR income enables bankrupts most effectively to discharge their repayment obligations.

The Government's declared willingness to help the more responsible of these people to find work, provisionally with a project called Green Ribbon, is therefore to be commended.

The intent, mentioned in Parliament last week, will be well received by both creditors and debtors. Amendments to the Bankruptcy Act since 1995 have made bankruptcy less probable and prolonged. The financial and practical price, however, has not diminished as fast as the social stigma has. The Act prescribes punishments for violation of a wide range of disqualifications and prohibitions. It restricts bankrupts' rights to own only basic necessities or obtain only small loans. It requires them to get permission to travel, manage businesses or be company directors. To encourage enterprise risk-taking and foster tolerance of business setbacks, an amendment in 1995 authorised the Official Assignee to discharge a bankrupt by certificate after a few years, usually three, if debts amounted to less than $100,000.

This ceiling has been raised, to $500,000. The minimum debt for which bankruptcy can be petitioned was increased from $2,000 to $10,000 in 1999. Another amendment under consideration would allow individuals to avoid bankruptcy through a scheme to repay debts totalling less than $100,000.

The Law Ministry's Insolvency and Public Trustee's Office should assess if the law changes have met their objective in containing bankruptcy, as distinct from insolvency due to economic fluctuations or bad habits. The 1999 change initially slowed the increase in bankruptcy cases, but anecdotal evidence shows that credit card and consumer overspending has persisted. According to bankruptcy lawyers, delinquency is increasing among mainly men and the young - and among parents acting as guarantors for their children. Most of them reportedly hold jobs, but complain their earnings are not enough to pay off their debt. They should heed the Prime Minister's recent advice that people live within their means in these inflationary times.

The proposed Green Ribbon project is obviously not meant for such people. It will help put to work only a small, deserving portion of the 26,000 undischarged bankrupts as of February. They include several hundred professionals, executives and technicians whose experience would otherwise go to waste. Helping them find work, possibly with the help of the Manpower Ministry, will give them a chance to show their commitment to make a fresh start financially.