UK government announces increase on minimum level of debt above which bankruptcy can be forced
Business Minister Jo Swinson has announced changes that increase the minimum level of debt for which someone owed money can force a person into bankruptcy, from £750 to £5,000. The limits were last revised in 1986.
Another change announced increases the amount of debt that someone owes to be eligible to apply for a debt relief order (DRO) from £15,000 to £20,000. A DRO is a low-cost alternative to bankruptcy for those with very low assets and income and debt that they are unable to pay.
Someone applying for a DRO has to pay the Insolvency Service a one-off fee of £90.
The Insolvency Service sought views from industry, debt charities and other interested parties on the operation of DROs and bankruptcy debt threshold last year.
Evidence showed that DROs help some of the poorest and most vulnerable people in society make a new start and improve their mental well-being. The new changes will allow more people to get resolution when faced with debts they cannot pay.
The changes will not disadvantage those owed money because eligibility for a DRO will continue to be restricted to those with very low realisable assets and therefore no realistic ability to repay their debts.
* If you are faced with a debt recovery or insolvency legal problem, we can put you in contact with a barrister who is an expert on the subject and can advise you quickly, efficiently and cost-effectively.