The Liberal Democrat Business Minister Jo Swinson has announced today that the bankruptcy threshold will rise from £750 to £5,000.
The effect of the new measure is that:
Under English insolvency law, a creditor (or creditors acting together) can present a bankruptcy petition against an individual to the court in respect of one or more debts if, at the time the petition is presented:
- The amount of the debt (or aggregate amount of the debts) is equal to or exceeds the bankruptcy level ( this will now be £5,000).
- The debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor(s) either immediately or at some certain future time and is unsecured.
- The debtor appears either to be unable or to have no reasonable prospect of being able to pay.
- There is no outstanding application to set aside a statutory demand served in respect of the debt (or any of the debts).
It is worth noting that under English law any individual debtor can be made bankrupt whether or not such individual runs a business and whether or not he/she has a job. In other words a pensioner, a student, a housewife can be made bankrupt.
Business Minister Jo Swinson said: Struggling with unresolvable 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.