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20 Jul 2011
INSOLVENCY TRADE BODY R3 has welcomed the government's consultation on increasing the threshold for a bankruptcy petition that was put forward by a creditor.
The government has announced it will consult on increasing the petition level for creditors from £750 owed. R3 wants the threshold raised to £3,000.
Currently, a creditor can file a petition for bankruptcy if they are owed £750 or more.
"R3 has long campaigned for the rebalancing of the relationship between debtors and creditors because a number of creditors petition for bankruptcy on low levels of debts. The threshold of £750, which was set in 1986, is now outdated," said Lee Manning (pictured) R3 vice-president and Deloitte partner.
Manning continued: "The Government today acknowledged 'that to be able to threaten someone with bankruptcy for such a small amount is disproportionate'. We are pleased the Government is listening to R3's concerns on this issue."
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Visitor comments Add your comment
About time!
I'd say £3k is the minimum at which the bankruptcy threshold should be set. If the intention is it remain the same for another 25 years, then it should be higher.
Average household unsecured debt is about £8K. Average individual debt, where a debtor has unsecured debt, is around £15.5K. So we are saying a creditor can initiate action if owed roughly a fifth of the typical individual's oweings. That seems right to me - and likely to stop over aggressive creditor action.
Posted by: Andrew_F_Smith, 20 Jul 2011 | 13:40