From October, the bankruptcy threshold (the minimum level of debt that can force a bankruptcy) will increase from £750 to £5,000. This is the first time the Government have increased the threshold for almost 30 years.
The reason for the increase is because with other credit controls in place, such as County Court Judgements (CCJ), placing someone in a bankruptcy position due to a small value could be seen as disproportionate response.
As well as making it more difficult to bring bankruptcy proceedings, BIS will also increase the maximum debt level at which people can apply for a debt relief order, from £15,000 to £20,000. The insolvency minister said the intention of this is to allow more people to access debt relief without turning to bankruptcy.