Bankruptcy threshold rises from £750 to £5,000
All bankruptcy petitions presented on or after 1 October 2015 will require the debt to be £5,000 or more – a rise from £750.
The £750 bankruptcy threshold still applies for all bankruptcy petitions presented to the court by creditors before 1 October 2015.
The £750 threshold also continues to apply for corporate insolvency, for example, for winding-up petitions.
This is a blow to creditors who frequently use the statutory demand as an effective debt-recovery tool, although it was never intended for such use. Creditors with debts below £5,000 may need to revise their debt-recovery procedures and focus on other effective and more general credit-control measures in order to manage their debt levels and maintain cash flow.
Inevitably, the new threshold will mean that more debt recovery matters go before the courts, often in the small claims track, where any ambiguity in terms and conditions may frustrate the creditor’s ability to achieve a quick and effective remedy. Now is therefore a fitting time to review your terms and conditions of business.
Expert legal advice on insolvency and debt recovery
For expert assistance with any insolvency matter contact Partner Jeremy Laws on or 01323 435 900.
For expert help with any debt collection matter contact Associate Solicitor Daniela Catuara on or 01323 435 900.
To book an expert review of your business’ terms and conditions contact Associate Solicitor Gemma Ritchie on or 01323 435 900.
Posted: 30 September 2015
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