Under new legislation the bankruptcy level will be raised from £750 to £5000. Therefore creditors will need to be owed a minimum of £5,000 before they are able to petition for a debtor’s bankruptcy (the level for liquidation of a debtor company remains at £750). The £750 was set way back in 1986 and the new level will apply to petitions presented by creditors after 1 October 2015.
It was right the petition level was increased although £5,000 is higher than necessary. Creditors will lose the choice of bankrupting a debtor (or threatening bankruptcy with a statutory demand) where the debtor is an individual and does not owe them at least £5,000. This will mean there will be fewer bankruptcies. For claims below £5,000 creditors will be limited to court action and enforcement action such as bailiffs, charging orders or attachment of earnings.
Hopson Solicitors recognise that cash flow is important to businesses and will shortly be launching a fixed fee highly effective debt recovery service. Further details to follow.