The changes will allow approximately 3,600 more people a year with problem debt to enter into a Debt Relief Order (DRO) – a low cost alternative to bankruptcy for those with very low assets and income and debt which they are unable to pay. The maximum amount of debt that can be covered by these plans will increase from £15,000 to £20,000.

 

The government is also increasing the minimum level of debt for which someone owed money can force a person into bankruptcy from £750 to £5,000. The limits were last revised in 1986.

 

 

https://www.gov.uk/government/news/improved-help-for-people-struggling-with-problem-debt

Changes announced today include:

•Bankruptcy creditor petition level to be increased to £5,000 from £750

•DRO limits raised to £20,000 enabling some 3,600 more people with low level debt to use DROs instead of the more expensive and onerous bankruptcy process

•DRO asset limits raised to £1,000, plus a vehicle (worth not more than £1,000)

•The maximum surplus income a person can have to qualify for a DRO will remain at £50 per month

•A light touch monitoring of the intermediaries to maintain consistency.

 

 

This is really good news.

This is extremely good news for everyone!!!

No more Statutory Demands being issues like confetti!

cheers for the info citb

dro 'surplus' still at 50 seems a bit of a negative. does anyone know what the dro Expend allows/covers?

I think you would need to speak with National Debtline/CAG for those figures, Ford.

Excellent points Ford. It ALL needs to be updated, including the amount of disposable income. On the whole, very positive looking changes though.

I missed this bit...

 

The changes will be subject to Parliamentary scrutiny before coming into force in October 2015.

If approved by parliament, are we going to see a flurry of bankruptcies in August/September this year?

If approved by parliament, are we going to see a flurry of bankruptcies in August/September this year?

I am thinking no. At the moment, creditors can make someone bankrupt for a mobile phone debt (£750.00) and Lowells have been known to do this (or at least to issue the stat demand).

Lowells have also been known to roll up small catalogue debts in order to achieve the £750.00 in order to permit them to issue a stat demand.

So at least debtors in this position have some protection.

I guess there might be some people who apply for personal BR who have over the £5,000 threshold who might still apply.

This is absolutely cracking news. Lets hope it goes through and stop the silly petty stats from the greedy brigade and Councils who are a bad as the dca'.

I don't think we'll see an increase in BK's. AS said, the lowlifes like Lowells and others have been using BK as a threat, and indeed a punishment for small debts. £750 is nothing nowadays in real terms.

I think the broad canvas looks exceedingly good. When it is scrutinised by parliament, it will be interesting to see how the detail changes, as that could make or break this. Perhaps the threshold could be linked to inflation or the RPI? At least then we wouldn't end up with figures which are 29 years old.

Interestingly, £750 in 1985 would be worth approximately £2100 today, so the plan is to increase the figure by just under 250% even allowing for inflation. That is significant. If the £50 disposable income for a DRO were increased by the same amount (allowing for inflation) you'd be looking at having a disposable income under approx. £400 to be eligible. Clearly this would be very significant.

The detail will be fascinating.

. It ALL needs to be updated, including the amount of disposable income. On the whole, very positive looking changes though.

ditto, as you say, at least in line with inflation.

Wonder what lowells and carter will do now that their main debt collection method is being removed

This is excellent news. David Cameron said that he wanted the government to do this a few years ago - before the 2010 election I believe - it will be good to see it finally happen.