r
_

New Bankruptcy Threshold

Bankruptcy is no laughing matter, but its threat can be described as funny (peculiar).

It is often used as part of a debt collection game.  The creditor can think it only needs to mention the word and the debtor will pay up.

The rules of the game will be changing from 1st October 2015.  From that date, you cannot issue bankruptcy proceedings for a debt of less than £5,000.

The first thing to think of, then, is any <£5,000 debtors you were thinking of pursuing that way, you need to be able to get to court before October.

After October, the creditor needs to re-assess the way it allows debt to build up.  With one of the most effective credit control tools now removed, it would be wise to restrict credit to non-corporates.  If you take your eye off things and the debt escalates, then you may wish to let it escalate to >£5k before pressing the stop button.  It will be easier to collect a debt of £5,100 than one of £4,900.

Share