McHale & Co. Solicitors Blog

Raise in threshold for bankruptcy

In order for a creditor or debtor to currently petition for bankruptcy the debtor must have debts of at least £750.

This means that the threat of bankruptcy can be used as a tool to recover a debt where the moneys owed are at least this amount.

From October 2015, the threshold will increase from £750 to £5,000. This is good news for debtors because if creditors want to claim debt, which is less than £5,000, they will no longer be able to serve and rely upon a statutory demand as a threat and precursor to bankruptcy proceedings.

Instead, creditors and their representatives will have to go down the route of threatening and issuing proceedings in the County Court, for a money claim, in the usual way.  This procedure is often more time consuming as the threat of Court proceedings on the Small Claims Track, where each party bears their own costs, is much less than being in a position to petition for an individual’s bankruptcy, where the costs of pursuing the bankruptcy can be added to the debt.

However, as we all know, bankruptcy is a serious business; £750 seems a relatively small amount to have somebody made bankrupt and therefore the public policy rationale behind the change is apparent.

However, unfortunately, the change will deprive creditors of an effective means of recovering debts

Unfortunately, the raise in the threshold will deprive creditors of an effective and more cost effective means of recovering debt as opposed to a County Court Judgment. It will also inevitably lead to further claims being issued in the County Court Money Claims Centre, which is notoriously currently overrun.

Should you wish to recover sums outstanding to you by way of threatening bankruptcy or other means or if you want to petition for your own bankruptcy please contact us on 0161 928 3848 or at

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