It is a well known fact that many people per annum are declared bankrupt. This is either due to their own financial situation turning sour whether innocently or negligently or even due to fraud.
The UK government have revised the threshold upon which an individual can be declared bankrupt. This is the first increase in some thirty odd years, whereby now a person needs to have a debt of £5,000 plus. This is a significant increase from the current limit of £750.
There are many individuals, charities and other organisations that welcome the changes. This is because now a person cannot be made bankrupt for a relatively small sum of money. My view is that I disagree with the fact that the legislation is positive. This is because it will now be much harder to push rogue tradesman, and people generally who are negligent at paying back their debt. This is because they will not have the bankruptcy threat to make them pay unless the debt is over £5, 000.
Whilst the above change is good news for some people, and bad news for creditors, a further change has also been made; whereby the government has given a boost to a bankruptcy alternative in the form of a debt relief order. This is a less drastic order than bankruptcy, which put simply means a person is insolvent, and probably cannot get any form of credit for a period of one year as a minimum.
With reference to a debit relief order at present this is only an option for someone with assets of less than £300, and a debt of less than £15, 000. The monetary restrictions meant that it was a minority of people that could actually get a debt insolvency order. The government has lifted the limits; therefore at present someone with £20, 000 of debt and assets of £1, 000 can apply for a debt insolvency order. The maximum surplus income limit to apply for an order, shall remain at £50.00 a month.
Although the new limits is very good news for people that owe monies because now they have a higher limit before they can be made bankrupt, as well as a higher limit to be eligible for a debt insolvency order, I firmly believe it is a get out clause for many rogue traders. The government should have ensured that the new limits apply to personal debt, and not debt related to business activities.
Overall, aside from rogue traders for honest, innocent individuals that have just let debt get the better of them, atleast now the limits have been increased, they can put right their debt situation without considering the fact that they will be made bankrupt by the credit. The creditor now needs to consider other options, which are probably more realistic for a personal/private individual.