Today Business Minister Jo Swinson has announced changes to make it easier for the financially vulnerable to manage problem personal debt.
This follows CAP’s involvement in the campaign to raise the maximum debt limit for a Debt Relief Order (DRO) amongst other proposals, as currently more than a third of our clients, many of whom are vulnerable, are too poor to go bankrupt.
From October 2015, the DRO debt limit will be raised from £15,000 to £20,000 and the asset limit from £300 to £1,000. The Insolvency Service predict this will enable 3,600 more people to use DROs instead of more expensive insolvency options. From CAP’s research this will allow 34% of our clients who are ’too poor to go bankrupt’ and were only ineligible for a DRO due to the previous debt limit to access a debt solution.
The Insolvency Service also announced an increase in the bankruptcy creditor petition level from £750 to £5,000. CAP welcomes this change and is pleased the Insolvency Service acknowledged creditors being able to trigger bankruptcy through the courts was disproportionate for such a small amount of debt
CAP’s CEO Matt Barlow said: “The limit of £15,000 of debt was set in 2009 so we’re delighted the Insolvency Service have brought this bang up-to-date and we’re pleased to hear it will be reviewed again in 2017. We had campaigned for the limit to rise to £30,000 which would have seen more than half of our clients able to afford this debt solution. However, the line had to be drawn somewhere and £20,000 is a good start.”
You can read the Insolvency Service’s full article here and our response to the Insolvency Service’s consultation here.