A much needed law change happened on the Ist October 2015, that went pretty much unnoticed.
Did you know that before that date, if you owed a creditor as little as £750, they could apply to the courts to make you bankrupt?
Implications of bankruptcy
– Any assets such as your car or home could be sold to pay back the debt.
– It will remain on your credit file for 6 years, meaning you will find it extremely difficult to obtain credit, loans or a mortgage.
– You will not be able to act as a company director.
Bankruptcy was meant to be a last resort, for people or companies that were insolvent to the point of being unable to pay their debts, debts that were usually a large sum of money owed.
Unfortunately some took advantage of this situation, and the mere threat of applying for bankruptcy from a creditor to a debtor over as little as £750 was enough to cause serious implications and further financial hardship.
As of 1st October 2015, the law has now changed and the amount of debt you would need to owe before anyone can apply for bankruptcy against you, is now a more realistic £5000.
A welcome change.
For further information on bankruptcy in the UK Stepchange.org