Bankruptcy petition threshold could rise to £3,000

Debtors may soon have to owe £3,000 or more before creditors can petition for bankruptcy. The current level is £750.

The proposal to raise the threshold has been put forward by the Business Minister Edward Davey as part of the Government’s review of debt advice and personal insolvency.

It follows a public consultation and call for evidence carried out earlier this year.

The petition debt level threshold has remained at £750 since the Insolvency Act came into force in 1986. The Government believes it is disproportionate to threaten someone with bankruptcy for such a small amount.

It’s now running a consultation on increasing the threshold, with £3,000 being the likely new figure.

The Government has also proposed that the Money Advice Service should perform a central role in the co-ordination of debt advice. It also wants to develop a protocol setting out what to expect from a Debt Management Plan. 

There’s to be a consultation on how to make it easier for bankrupts to have access to a basic bank account, and ministers want to see a strengthening of voluntary codes of forbearance where debtors need a breathing space to seek debt advice or recover from sudden income loss. 

Mr Davey said: “”While it is clear that stakeholders have strong concerns about some aspects of the personal insolvency framework, no strong case has been made for a radical shake-up. However, I am convinced that there is more that can be done to improve the delivery of debt advice to the most vulnerable and intend that Money Advice Service take up this work.

“”I want to see creditors, debtors and particularly providers working together to improve standards in debt management, so that debtors are directed only to those operating the very best service, leaving no place for the rogue providers who are only in it to make money for themselves.””

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