NEW DELHI: The government has begun work on laying down a process for individuals to be declared bankrupt , which will help them deal with a financial crisis rather than be bogged down by it. The rules being framed will help a defaulter repay the money in a structured way, rather than being forced to cough it up to banks in one go.Sources said the idea is to make the process more humane as the rules would deal with a host of individuals — from farmers and kirana shop owners to a salaried middle class person who may be struggling to repay a loan for reasons like loss of job.“There is huge social stigma attached to this. So, you cannot be punitive. People should be allowed to restructure their lives, ” said Sumant Batra, managing partner and head of the insolvency, secured transactions & corporate law practice at law firm Kesar Dass B & Associates.There are laws dating back over a century to deal with individual bankruptcy but they have been used only sparingly in the last several decades. The jurisdiction mostly lies with district judges.Currently, banks approach Debt Recovery Tribunals (DRTs) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), which are aimed at recovering the dues.While the Insolvency and Bankruptcy Code (IBC), enacted by Parliament last year, provides for individuals to be declared bankrupt, so far, action has been confined to the corporate sector and start-ups. The ministry of corporate affairs and the Insolvency and Bankruptcy Board of India have now begun discussions on putting in place rules to help individuals and partnership firms. Aworking group is looking at several aspects, including making counselling mandatory as is the case in Singapore.Similarly, there is a need to make the legal system more easily accessible. “We need to ensure that there is adequate infrastructure to help people who are already stressed. Plus, issues related to state laws need to be worked out,” said a source.