The Insolvency Service have called for evidence to make improvements to the current bankruptcy procedure and also to review the Debt Relief Order which was introduced in 2009.
Currently the minimum threshold to make someone bankrupt is set at £750, however this figure has been in place since 1986 and is therefore outdated. Plans to raise the threshold are currently being considered by the government.
The government are not just considering whether the minimum level of £750 is set too low, they are also considering whether vulnerable debtors need improved help and further information on their current situation. They are also assessing if Debt Relief Orders are actually helping people keep away from the cycle of problem debt in the long term.
Debt Relief Orders were introduced to help the most financially vulnerable individuals handle their debt, acting as a low cost alternative to bankruptcy. According to The Insolvency Service 140,861 people have entered into a Debt Relief Order since 2009 and over £230 million pounds worth of debt has been discharged.
Although Debt Relief Orders are a relatively new part of the personal insolvency system, it is important to review their use and effectiveness now rather than later. The regime must have the right balance in helping people struggling with debt while protecting creditors from people who rack up debt and then dump it. Hopefully the review will address the issues and further improve the personal insolvency system for everyone.
If you have any questions about insolvency, bankruptcy or Debt Relief Orders we are here to help, contact us today.
Posted: October 8th, 2014