Changes to Debt Law

Major changes to debt law came into force on 1 April 2015.

The main changes are:

• a new way to apply for your own bankruptcy if you have a very low income and very few assets. This is called the Minimal Asset Process (MAP) bankruptcy. You can apply for MAP bankruptcy if you have debts of at least £1,500 and meet a number of conditions. You will only have to pay a reduced fee of £90.

• if you want to apply for your own standard bankruptcy, you can only apply if you have debts of at least £3,000.

• if you want to apply for your own bankruptcy, you have to get money advice from a money adviser.

• money advisers must assess your income and expenditure using the common financial statement. This is a tool that is used to work out if you have any surplus income to pay towards your debts.

• if your money adviser has calculated that you do have enough income to make a financial contribution towards your debts then you will usually have to pay these contributions for 4 years.

• your trustee may ask you to take a course in financial education. You may have to do this if you have been made bankrupt, had a protected trust deed or been in a DAS debt payment programme in the last 5 years, for example.

• if you have been made bankrupt under MAP, you will be discharged automatically after 6 months. This means that most of your debts will be cancelled. Under standard bankruptcy, you will usually be discharged after one year, although this is dependent on whether you have cooperated with your trustee during the bankruptcy.

If you are considering setting up any type of debt relief option,  please make an appointment to see one of our money advisers

Moira Tasker