New bankruptcy rules are coming into effect from next month which should make it easier for people to enter the debt solution.

The changes to bankruptcy have been introduced to help people on low/no income and with limited assets to declare themselves insolvent.

Bankruptcy Rule Changes

Creditor Petition: Creditors are currently able to apply to the courts to have a person declared bankrupt if they owe a minimum of £750 but that will rise to £5,000.

Debt Relief Order (DRO): A DRO is considered a cheaper route into bankruptcy because it costs £90 to apply for, instead of paying the £705 for government and court administration fees.

The maximum debt allowed to enter a DRO is £15,000 and £300 in assets, but from next month people will be able to apply for a DRO if they owe up to £20,000 and have £1000 in assets.

Who’s Most Suitable For Bankruptcy

While anyone can apply to be declared bankrupt through their local country court, it’s not always the best debt solution everyone.

It’s important to get debt advice before entering any debt solution, especially one as serious as bankruptcy because of the consequences associated with it.

If someone enters bankruptcy with assets they may lose them to recoup money for creditors and if someone is in employment an income payment order may be applied.

Standard Bankruptcy:

The changes will affect who is applicable for bankruptcy and which route into the debt solution is most suitable for them.

Anyone who is unemployed, has debts above £20,000 and who doesn’t have sufficient assets which could be realised to pay the debt.


If someone has debts less than £20,000 and assets worth less than £1,000, they may be suitable for a debt relief order. Although it’s worth noting if they were working and have a disposable income, they might be better suited to entering an IVA.

Considering Bankruptcy?

If you’re considering entering bankruptcy it’s crucial to get debt advice before starting the process because you may risk losing income, assets and more.

You can get debt advice from Debt Support Trust on 0800 085 0226.