Q&A: Bankruptcy

Q. I understand that there have been some recent changes in the law in relation to Bankruptcy petitions, what are these exactly?

A.  On the 1st October 2015 significant changes were made to insolvency law in the UK. One of the changes of particular interest to creditors who initiate proceedings on small debts is that a bankruptcy petition can no longer be issued on a sum less than £5000.This was an increase on the previous sum of £750. Also, a change was instigated with the objective of helping debtors gain access to a Debt Relief Order (DRO) i.e. an increase in the maximum amount of debt that can be covered by these plans from  £15,000 to £20,000. These changes should help reduce the number of insolvencies in the UK by allowing smaller debts to be resolved without going through the courts.

Kally Singh, Partner