INSIGHT: Bankruptcy petition threshold to rise
From 1 October 2015, creditors will only be able to petition for a debtor’s bankruptcy where the debt is over £5,000. Currently the threshold stands at £750 so the increase represents a huge jump.
The increase will provide a measure of protection from bankruptcy for those with small debts.
The increase was announced by Business Minister Jo Swinson back in January 2015 alongside the government plans to enable easier access to debt relief for financially vulnerable people. The plans were supported by Citizens Advice who were concerned that people with debts as small as £750 could lose their home, car, business or job. From 1 October, those with debts of up to £20,000 will be able to access relief and assistance by obtaining a Debt Relief Order (DRO).
For creditors on the other hand, the threat of a bankruptcy petition has always been an effective method to recover small debts and creditors will no doubt feel its loss. The looming increase might well result in a flurry of creditor’s petitions before the 1 October 2015 deadline.
If you want advice on debt recovery, contact Christopher Burke on 0161 684 6941 or email: christopher.burke@pearsonlegal.co.uk.
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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