Bankruptcy threshold rises to £5,000
1986 was quite a year. Margaret Thatcher was in power, mobile phones were the size of a brick (and very few people even had them), the internet, Facebook and twitter were still years away. 1986 was also the year that the level of debt for a creditor to pursue a debtor for bankruptcy was set at £750. It has stayed at that level until now.
This has meant that creditors have been able to issue a statutory demand – the preliminary stage in the bankruptcy process – for what, in time, have become relatively modest debts.
A change in the bankruptcy threshold has been long expected as the industry consensus was that the limit was too low. It was expected that it would be raised to £2,000 so the rise to £5,000 has come somewhat as a surprise.
This rise comes into force in October 2015. This will mean that creditors will no longer be able to issue a statutory demand to a debtor for undisputed debts between £750 and £5,000.
The upcoming change in the threshold is likely to lead more creditors towards court proceedings with a view to obtaining a judgment for the debt. If the judgment is not paid, a range of enforcement options may be available, including instructing a High Court Enforcement Officer who can obtain a Writ of Control which authorises the seizure and sale of a debtor’s goods if payment is not made or a payment plan is not agreed.
Phil Oke, partner
Philip Oke, partner