Bankruptcy rules to change, Business Minister announces, raised from £750 to £5,000

[Tools]

http://legalbeagles.info/bankruptcy-...e-independent/

There’s good news for people struggling in debt - the minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000. The limit was last set in 1986 and the new rules will come into effect in October, Business Minister Jo Swinson announced this morning.


At the same time the maximum amount of debt that can be covered by Debt Relief Orders – the low-cost alternative to bankruptcy - will increase from £15,000 to £20,000.

Full story here http://legalbeagles.info/bankruptcy-...e-independent/

[Captain Haddock]

Re: Bankruptcy rules to change, Business Minister announces, raised from £750 to £5,0

This is indeed good news and not before time, too! This'll put all these low-life lawyers in their place when it comes to trying to bankrupt people over a few hundred pounds worth of debt! I wonder how many of them will still try it on, being totally unaware of the change of threshold?

[wales01man]

Re: Bankruptcy rules to change, Business Minister announces, raised from £750 to £5,0

They did not Consult one particular DCA and their tame solicitors then?
Good move makes more sense

[Amethyst]

Re: Bankruptcy rules to change, Business Minister announces, raised from £750 to £5,0

I posted the responses separate but this is the main bit on the SD limit - only 8% of the respondents were DCA's.

Analysis of responses
The overwhelming majority of respondents suggested an increase in the creditor petition limit. A variety of amounts were suggested ranging from £1,500 to £10,000 but with the majority suggesting an amount of either £3,000 (reflecting Scotland) or £5,000. Other comments were made illustrating that the current level can lead to cases where the use of bankruptcy is not proportionate.

Christians Against Poverty suggested that it should be mandatory to signpost debtors to free debt advice before commencing bankruptcy proceedings. A debt recovery company commented that, as they have access to consumers’ credit account information sharing data, they are able to make a more informed decision before taking insolvency proceedings. They are also bound by the FCA Code of Conduct and the Lending Code so only proceed with bankruptcy as a last resort.

A response from two (bankruptcy) District Judges said that there is an overwhelming case for a substantial increase in the petition limit. In addition to the issues around proportionality highlighted in the call for evidence, they also provided examples of petitioning creditors purchasing a number of small debts acquired at a discount and using them as a basis for bankruptcy proceedings. They also stated that despite the Coalition’s commitment14 to provide ‘more protection against aggressive bailiffs and unreasonable charging orders, and ensure that courts have the power to insist that repossession is the last resort.’ the bankruptcy of an owner occupier frequently results in the eventual loss of the bankrupt’s home. They argue that the social costs to which this gives rise and the hardship caused should not be triggered by a debt as small as £750.

[DebtSanity]

Re: Bankruptcy rules to change, Business Minister announces, raised from £750 to £5,0

This is a long overdue move. Interestingly, the Government has gone way beyond the advice of its own Insolvency Service who suggested an increase to £2,000. Debt collection firms aren't too happy generally because by their own admittance they use Statutory Demands (what precedes bankruptcy) as a debt collection tool. So for debts between the old amount of £750 and the new amount of £5,000 that's one tool less in their armoury!