Bankruptcy reforms receive local support
New government proposals set to prevent dozens of people falling into bankruptcy have been welcomed by a local insolvency expert.
Linda Farish, chair of trade body R3 believes that a recommendation to raise the debt level for which creditors can petition for someone to be made bankrupt will make the system fair for those in financial difficulties.
The current threshold for bankruptcy is set at £750, a figure which Linda believes is outdated.
She commented: “ We are pleased that the Government has now joined us in recognising that to be able to threaten someone with bankruptcy for such a small amount is disproportionate.“
Moving this figure up to £3000 would, if adopted, be a more appropriate sum for a creditor to petition for bankruptcy.“
It is also hoped that the review will lead to changes to the Debt Management Plans (DMP) industry, which often contain hidden fees and offer terms that are too high for individuals to repay.
Linda is now calling for the regulation of DMPs to become the responsibility of the Insolvency Service to ensure that insolvency providers are regulated to the same standards, in a move that would immediately cut the likelihood of unsuitable agreements being made.
She added: “Out view is that that Government should move quickly beyond just recognising the need for reform and should make the necessary changes to the industry as soon as possible, in order to begin to cut the number of people who are simply jumping out of the frying pan and into the fire when it comes to trying to address their debt problems.”