Businesses chasing debtors for outstanding payments are being warned to update their practices following an increase to the personal bankruptcy limits.
Previously, a creditor owed £750 or more – the bankruptcy limit – could serve a demand for the debt, followed by issuing a bankruptcy petition at court if the debt was not paid.
Now this limit has been increased to £5,000 meaning businesses owed less than this amount will need to turn to other means of seeking payment such as a county court claim.
Suzanne Dean, Debt Recovery Manager at Napthens solicitors, warned that businesses should ensure they are not caught out by the new rules.
She said: “Any business owed money from individuals should ensure they are aware of the new personal bankruptcy limits which mean that the procedures used for obtaining what they are owed will change.
“County court claims, for instance, are a slower and more costly solution. Therefore, advice should be taken from a legal advisor for debts under the new £5,000 limit.
“If a debt is owed by a company rather than an individual, the current limit of £750 is staying the same so options for seeking payment won’t change.”