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The Credit Services Association (CSA)
DRO and bankruptcy petition limits
Key changes are:
- The maximum amount of debt that can be covered by Debt Relief Orders (DROs) will increase from £15,000 to £20,000 – these are a low cost alternative to bankruptcy for those with very low assets and income and debt which they are unable to pay.
- 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.
The changes come against a background of falling insolvency numbers since 2010. In response to these changes Business Minister Jo Swinson said:
“Struggling with unresolvable [sic] 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.”
The changes will be subject to Parliamentary scrutiny before coming into force in October 2015.