The Debt Advisory Line has welcomed recent plans by Business Minister Ed Davey to quadruple the threshold of debt before a creditor is able to petition for bankruptcy. According to the Debt Advisory Line’s Craig Gedey, the proposal spells good news for anyone facing the threat of having to file for personal insolvency over an amount as low as £750. If Davey can garner enough political support for his ideas, the new border would be drawn at a far more significant £3000. The move is intended to counter tendencies designed at threatening those in debt with personal insolvency over a disproportionally small amount of money. As the minster pointed out, “While it is clear that stakeholders have strong concerns about some aspects of the personal insolvency framework, no strong case has been made for a radical shake-up. However, I am convinced that there is more that can be done to improve the delivery of debt advice to the most vulnerable and intend that Money Advice Service take up this work.”
Debt management companies have, in the past, repeatedly criticised the adverse effects and potential for opportunism caused by the low threshold. While the interests of creditors undeniably need to be taken into account, bankruptcy is rarely the best solution for either side, after all. It should, also with regards to the harmful long-term implications of insolvency, only be considered as a last resort. Gedey said: “We have long considered the current threshold as inviting abuse by impatient creditors, which is making the already stressful consequences of a bankruptcy even more painful for borrowers. Raising the limit to £3000 would ensure that those with financial difficulties can focus on the most important thing – paying back their debt – rather than having to worry about being unnecessarily forced into bankruptcy every single day.“
His comment was mirrored by Davey’s plead for more constructive solutions to existing debt problems. As the Minister put it, he wanted to see “creditors, debtors and particularly providers working together to improve standards in debt management, so that debtors are directed only to those operating the very best service, leaving no place for the rogue providers who are only in it to make money for themselves.” Gedey supported these words, stressing that, “as a member of DEMSA, we have pledged to uphold ethical standards in debt management and to find solutions which will benefit both sides of the equation. We feel that the recent proposals by the Minister would significantly support us in these aims.“
The Debt Advisory Line has already helped thousands in danger of bankruptcy. If you would like to speak to one of our professional advisers, please call us on 0800 157 7254 or follow this link for more information on bankruptcy.