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The Bankruptcy Threshold for a Creditor’s Petition

The number of people being declared bankrupt has reduced sharply in recent years, possibly because the threshold required for a creditor to issue a bankruptcy petition is £5,000.

The change came into effect from 1 October 2015 and was the first increase in three decades. The consensus was that the 1986 figure of a £750 limit was too low, however an uplift in line with inflation would have resulted in a figure of £2,500 so this was a very significant increase.

Issuing statutory demands with the ultimate threat of bankruptcy, is often used by creditors, collection companies and councils, to apply pressure on debtors to pay.

This change inevitably impacts upon small businesses to recover money owed to them; the only other option for them to collect a debt, is to obtain a judgment through the small claims court and then to use bailiffs or High Court Enforcement. This process can be slower, more time consuming and potentially more costly.

It should be noted that for limited companies, there are currently no proposals to raise the threshold, and a creditor can still apply to the court for a winding up petition (compulsory liquidation) if the debt is more than £750.

About the Author

Tom Grummitt

Tom's focus is primarily on personal insolvency and on investigating the circumstances leading to insolvency, to ensure that creditor concerns around how an individual or business has operated prior to the onset of insolvency are alleviated.

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Thomas Grummitt and Andrew Smith are licensed to act as Insolvency Practitioners in the UK by the Insolvency Practitioners Association. In carrying out all work related to an insolvency appointment, insolvency practitioners are bound by the insolvency code of ethics and are subject to the regulations and guidance of their authorising body. Details of the code of ethics, statements of insolvency practice and other regulations and guidance issued by the Insolvency Practitioners Association can be found here: