Are you aware that the minimum debt level required to serve a statutory demand changed in October 2015?
So what is a statutory demand? A statutory demand is one option available to seek payment of an undisputed debt from an individual or company. When a debtor receives a statutory demand they have 21 days to either pay the debt or reach an agreement. If they fail to respond within this time limit, a creditor can apply to bankrupt the debtor or ‘wind up’ their company. This was once a popular option to seek a quick recovery of monies owed from a debtor.
Since 1986, the minimum debt level has been set at £750.00. So, any debt owed in this sum or above would allow a creditor to serve a statutory demand. However, this minimum debt level did not rise in line with inflation and saw creditors often using the threat of bankruptcy to reclaim small and low value debts.
Therefore, on 1 October 2015 we saw a big shake up of these limits and the new minimum debt level for individuals was increased to £5,000.00, far exceeding what many practitioners predicted. The corporate insolvency minimum debt level still remains at £750.00.
So under current legislation this means that from October 2015 any creditor seeking to serve a statutory demand against an individual may only do so for a sum of £5,000.00 and above. Any debt owed below this limit must now be sought in the County Court via a small claim.
If you or your business would like any assistance with a debt recovery matter please don’t hesitate to contact our litigation department on 01270 762325.