In 1986, bankruptcy had a minimum debt threshold for an individual of £750. 30 years on, this will be increased to £5000 on 1st October 2015.
According to the Bank of England’s inflation calculator, £750 in 1986 is worth little under £2,000 in today’s money. The proposed threshold is to be increased by considerably more than the inflation impact over that period.
This increase was announced in January this year by Business Minister Jo Swinson. At the same time, she announced a new maximum amount of debt that can be covered by a Debt Relief Order (DRO). This will increase from £15,000 to £20,000.
A DRO is a formal plan, similar to bankruptcy, but aimed at people with minimal assets and lower levels of income and debt. It is cheaper to arrange for the debtor. DRO’s help some of the poorest and most vulnerable people in society.
At the time of the announcement Jo Swinson said, “Struggling with unresolvable debt can cause immense stress for families. These changes will ensure that our debt relief schemes are updated so that they still meet their original goal of providing access to those who need them. They also ensure that bankruptcy, which has the most significant consequences, is reserved for those with sizeable debts.”
It has been estimated that the impact of these changes will be to allow some 3600 per year to enter a DRO. This should also result in fewer individuals being declared bankrupt.
If you are struggling with debt problems, large or small, don’t ignore them as help is available. Whether you have personal or business debts, contact one of our experienced, friendly consultants for a free confidential chat.