Changes to bankruptcy arrangements welcomed by R3

GOVERNMENT changes to the bankruptcy and debt relief thresholds for indebted individuals have been welcomed by the Midlands branch of the insolvency body R3.

The body said the move would make it easier for people to find professional help and avoid bankruptcy.

Commenting on the proposed increase of the creditor bankruptcy petition threshold from £750 to £5,000, and of the Debt Relief Order debt from £15,000 to £20,000, R3 Midlands Chairman Richard Philpott said: “This is the first time the limits have been revised since 1986 and the rise in the creditor bankruptcy petition threshold is most welcome.  

“Although £5,000 is far higher than expected, it is right that the petition be increased.  The sum of £750 was an entirely inappropriate level and the protection it offered debtors had been steadily eroded by inflation over the last three decades.
 
“The proposed changes, which also include a rise in the assets limit from £300 to £1,000, will make it far easier for indebted individuals to deal with their debts effectively, and to take up the type of solution which is most appropriate for their situation.”
 
Philpott, also a partner at KPMG in Birmingham, warned that the rise in the petition threshold would require creditors to look at other options for the pursuit of low value debts.
 
He said: “While a bankruptcy petition is not always the most proportionate tool for this, it’s very important that the insolvency regime maintains a balance between protecting the interests of both debtors and creditors. How the new threshold works in practice should be monitored closely.”