Insolvency Partner Welcomes Announcement
Following the personal insolvency review, R3 has welcomed the Government’s announcement yesterday (19 July) that it planned to consult on increasing the petition debt levels for creditors. The insolvency trade body believes that a rise from the current level of £750 to £3000 would be a more appropriate sum for a creditor to petition for bankruptcy.
“R3 has long campaigned for the rebalancing of the relationship between debtors and creditors, as 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 The threshold of £750 which was set in 1986 is now outdated,” said Andrew Walker, Yorkshire regional chair of R3 and a partner at Irwin Mitchell
“With our latest research showing that levels of personal debt and financial distress are continuing to grow, it is more important than ever that the Government is listening to R3’s concerns on this issue.”
The Government yesterday acknowledged: ‘that to be able to threaten someone with bankruptcy for such a small amount is disproportionate.’
Mr Walker continued, “The Minister also revealed that the Government recognises the potential for regulatory reform of Debt Management Services. We have called for better regulation of the Debt Management Plans (DMP) industry for some time. R3 research shows that DMPs are often unworkable because the level of debt is too high, and 10 per cent of individuals in a fee-charging DMP were not told they would be charged until the scheme began.
“We call on the Government to go beyond recognising the need for reform and make the necessary changes to the industry. R3 suggests the regulation of the DMP market be removed from the OFT and become the responsibility of the Insolvency Service, to ensure all insolvency providers are regulated to the same high standard.”