Bankruptcy Petition amount
On 1 October 2015, the minimum undisputed amount which a creditor needs to be owed by an individual to entitle them to present a bankruptcy petition increased from £750 to £5,000.
As such, if an individual owes less than this amount to a creditor, they cannot be made bankrupt. However, this does not prevent a creditor from trying to recover those monies in other ways, such as county court proceedings.
However, creditors must be aware that the £5,000 minimum threshold has to relate to an undisputed debt. Before they can present a bankruptcy petition.
If, for example, an individual debtor owes £6,000 to a creditor in relation to four invoices of £1,500 each, but disputes the fact that one of those invoices is actually owing to the creditor, then the creditor may not be able to present a bankruptcy petition in respect of the debt, if the debtor can prove that there is a substantial dispute in relation to the invoice.
Similarly, if the debtor admits that the sum (in excess of £5,000) is owed to the creditor, but believes they have a counterclaim or right to set-off the debt against sums they are owed by the creditor, then again, the creditor may not be able to present a bankruptcy petition in these circumstances. The counterclaim or set-off has to be genuine however.
The minimum undisputed amount which a creditor needs to be owed by a company to entitle them to present a winding up petition remains at £750.
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