Threshold on creditors’ bankruptcy petitions may rise to £3,000

The minimum level of debt for a creditor to petition for bankruptcy could rise to £3,000 from £750, under proposals announced by the minister for Insolvency.

Edward Davey unveiled several proposals for consultation, including raising the petition debt levels for creditors, as he responded to the government’s call for evidence for it’s review of personal insolvency.

The minister’s proposals could impose a raft of changes to practices and processes across the personal insolvency profession.

They include creating a protocol setting out what to expect from a debt management plan and enabling the Money Advice Service to perform a central role in the coordination of debt advice. Davey added that the Money Advice Service should research and develop a delivery model for debt advice.

Voluntary codes of forbearance, where debtors need breathing space to seek advice, could also be strengthened under the proposals.

The minister also unveiled a consultation on how to create access for bankrupts to a basic bank account.

On proposing to raise the petition debt threshold to £3,000, Davey said the current level of £750 has not been increased since the Insolvency Act 1986 came into force.

Link to full Insolvency News article