The bankruptcy threshold (i.e. the minimum level of debt that can force people into bankruptcy) is due to increase in October for the first time in about 30 years. It is increasing from £750 to £5,000.
A debt of £750 is quite a small amount to be threatened with something as drastic as bankruptcy. The increase should reduce the number of situations where a creditor threatens bankruptcy for a relatively low debt via a Statutory Demand, even when they have no intention of making the debtor bankrupt. It should be good news for debtors.
Creditors might not be so happy though. Companies will need to review their credit control processes to consider alternative approaches to using Statutory Demands to encourage payment from non-paying debtors.
Winding up a company
You can still apply to the court to wind up a company if it owes you more than £750. If the ‘winding-up petition’ is successful, the company will be forced into liquidation.
It is likely that this figure will also be reviewed at some stage.