A recent review of personal insolvency has led to the Minister for Employment Relations, Consumer and Postal Affairs to propose raising the threshold for debt for which creditors may petition for bankruptcy.
Currently for a debt of at least £750, a creditor may make their debtor bankrupt. This amount was set in the Insolvency Act 1986 and has not been amended since.
Mr Davey has proposed increasing this threshold to £3,000 since being able to "threaten someone with bankruptcy for such a small amount is disproportionate."
This suggestion is one of many proposals concerning personal insolvency which include making people aware of what is involved in a debt management plan and giving the Money Advice Service a central role in coordinating debt advice.
The Money Advice Service was set up by the Government and provides money advice to customers in the UK.
Other proposals made by Mr Davey are to give debtors more time to seek advice and creating access to basic bank accounts for bankrupts.
He said: "I am convinced that there is more that can be done to improve the delivery of debt advice to the most vulnerable and intend that Money Advice Service take up this work."
He added: "I want to see creditors, debtors and particularly providers working together to improve standards in debt management, so that debtors are directed only to those operating the very best service, leaving no place for the rogue providers who are only in it to make money for themselves."
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