Should the £750 limit for Statutory Demands be increased ?

[Amethyst]

Re: Should the £750 limit for Statutory Demands be increased ?

Here's the Debt Counsellors response to the consultation - http://thedebtcounsellors.org.uk/ins...etition-limit/

The staffs many years of experience in debt advice in the charitable and charging sector leads us to the opinion that a £5,000.00 creditor petition level is appropriate as this links into an Administration Order option for debtors, and would hopefully stop inappropriate litigation that risks the debtors home.

The current £750 creditor petition level is far too low and is used by less scrupulous creditors to use the threat of bankruptcy to pressurise debtors into repayment arrangements which impose severe financial hardship on them and their families. The threat of being made bankrupt leads to clients diverting disproportionately more of their total affordable income for repayment to creditors to those who threaten bankruptcy. It takes no account of pro rata distribution and prejudices other creditors who may be actually owed more.

Q25: Is there any other aspect of the DROs or the creditor petition limit you would like to comment on?

The DRO system needs to be updated with a fully comprehensive creditor list to stop too many creditors being put in the miscellaneous category which requires manual input. This would allow for a better reporting process for the unit and a faster input for intermediaries.

On a separate but related issue the existence of Common Financial Statement Trigger figures, the StepChange expenditure guidelines. Insolvency Service income and expenditure guidance and Court Service figures has led to clients having different available incomes depending on which organisation they deal with. We believe the CFS trigger figures should be adopted by all bodies to provide greater clarity and uniformity. By way of example, a client who qualifies for a DRO using the CFS and trigger figures may not if the StepChange figures are used.

[Crazy council]

Re: Should the £750 limit for Statutory Demands be increased ?

I would go with 5000

anything higher may put it out of reach fro small business,

It needs to b e kept low enough so it can still be used as a tool by small business, becasue out of 1000s of people that get them selves in unfortunate positions, there will always be a few that have no intention of paying, however much you bend for them. And, people depend on being paid, to pay there own bills,

15K is way to high, and would only be usfull for large business,

It would be usfull iuf there was a way of checking how many Bankruptcy orders for small ammounts ( under 10k ), final get paid by the debitor, during the process of BK, as sometimes people wait till there pushed to this stage before they do what needs to be done.

( am only being devils advocate here ). IMHO, better rules around creditors pre actions, would be better than changing the ammount. Make it a requirment for the creditor to asses the situation formaly prior to actions.

[Amethyst]

Re: Should the £750 limit for Statutory Demands be increased ?

We're not answering the DRO section of the consultation as its very rare it is discussed on here.

W.I.P.


We are a free-to-use internet forum offering help, support and a platform for discussion to the general public who have issues involving debt and consumer
rights. Legal Beagles was formed and went live in May 2007 and is funded by voluntary donations from private individuals. We have a rapidly increasing membership and currently have just over 51,000 registered users and attract almost 2 million visitors a year.

We have a section on our forum dedicated to helping people deal with Statutory Demands from Creditors. Although many deal with the demand themselves a large proportion engage a solicitor to handle the Statutory Demand.

Based on a 50 case studies of LegalBeagles registered users, two thirds (33) of Statutory Demands were served for consumer credit debt under £5000, and around two thirds (19) of those were for consumer credit debt under £3000. 11 were for debts between £5,000 and £10,000 and 6 were for debts over £10,000.

The majority of cases had the Statutory Demand set aside based on a lack of evidence and documentation from the petitioner. Only 4 cases proceeded to a bankruptcy petition and 1 case resulted in bankruptcy.

We believe the creditor petition limit should be raised to £15,000. In line with the limit for Debt Relief Order and the current Republic of Ireland creditor petition limits.

We undertook a small survey of 104 site users and 32.7% agreed with us, whereas 0% believed the limit should remain as it is at £750.

Other results were;

• £5000 - 21.2%
• £1600 - 5.7%
• £3000 - 15.4%
• £10k - 11.4%
• £20k - 5.8%
• £50k - 5.8%
• £30k 1.9%

The current level of £750 for creditor petitions is far too low. A bankruptcy pressurises debtors into making unaffordable payment agreements with creditors and causes an untold amount of stress and worry for the debtor, who naturally fears they will lose their home, often for a debt of under £3000.

[Debt Camel]

Re: Should the £750 limit for Statutory Demands be increased ?

Sorry late to this thread.

I understand why you don't want to comment on the DRO limits being raised, but as that is the subject of this consultation and the stat demand just seems to have been tacked on, I don't think Legal Beagles should suggest "15k in line with DRO" , because many of the other responders (including me!) are arguing for DRO limit to be raised to 30k and no-one will take seriously a proposal to raise statutory demand minim to 30k...

I can't see why statutory demands have any natural linkage with DROs either. Statutory demands are mainly a problem for people with a property who would never be eligible for a DRO.

I have suggested 5k for stat demands. That will rule out the complete abuse of the process by some people. However it leaves statutory demands as a possible tool for small businesses who are being messed around by a debtor.

[Amethyst]

Re: Should the £750 limit for Statutory Demands be increased ?

Thanks DebtCamel. The only reason we haven't ventured into the DRO is purely because we don't really deal with them on here, so wouldn't be able to talk from experience or offer any case studies. Thus we are only looking at it from the Statutory Demand angle, of which we have dealt with very many.

We recently had a £1300 case which had gone to bankruptcy petition and bankruptcy and the IP fees were already at nearly £20k before we got involved. Maybe it is really more a fight on IP fees and powers that is required.

Sadly I just haven't had the time to write the consultation responses so we haven't submitted anything from our limited perspective, which maybe is for the best.

[Debt Camel]

Re: Should the £750 limit for Statutory Demands be increased ?

I obviously haven't made myself clear

I think it's sensible for you to ignore the DRO part and only reply on the Statutory Demand level.

I'm just saying, if you think 15k is a good limit, then argue why you think that level is right. DON'T SAY THIS IS BECAUSE 15K IS THE DRO LEVEL. Firstly that isn't a very good argument and secondly because the 15k is hopefully going to go up a lot.

[Amethyst]

Re: Should the £750 limit for Statutory Demands be increased ?

Right, yes, with you now. Thank you.

I don't think Stat Demands should be able to be used for consumer credit debt full stop myself, if that were the case then I'd be quite happy with a £5k level to help small businesses with invoice non payment etc. Bankruptcy is an option after judgment and other options have failed for consumer credit and there is no need, other than threats and intimidation for it on CCA debt. However that doesn't seem to be an option.

[spirit2534]

Re: Should the £750 limit for Statutory Demands be increased ?

Just found this topic.

Certainly £750 is far too low, it allows DCAs to attempt to intimidate relatively small debtors.
:doggieyes::tinysmile_aha_t:

I just wonder who are the most prolilicate demanders of SDs, I would guess HMRC but I might be wrong?

[nemesis45]

Re: Should the £750 limit for Statutory Demands be increased ?

I would suspect that overall its various murky layers and depths the " debt industry" using SD/BR processes as a 1st line of debt collection is one of the largest contributors to this injustice.

A level of £10k is one that has been much discussed but has been brushed under the carpet much as the lowering of the Limitation to 5 years in England and Wales was howled down by Ms de Tute now of Lowell with threats of " flooding " the courts with claims.

[Nibbler]

Re: Should the £750 limit for Statutory Demands be increased ?

http://www.independent.co.uk/money/b...s-9979919.html

There’s good news for people struggling in debt - the minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000. The limit was last set in 1986 and the new rules will come into effect in October, Business Minister Jo Swinson announced this morning.

At the same time the maximum amount of debt that can be covered by Debt Relief Orders – the low-cost alternative to bankruptcy - will increase from £15,000 to £20,000.

Jo Swinson said: "Struggling with unresolvable debt can cause immense stress for families. These changes will ensure that our debt relief schemes are updated so that they still meet their original goal of providing access to those who need them. They also ensure that bankruptcy, which has the most significant consequences, is reserved for those with sizeable debts."

The move marks the culmination of a long campaign by debt charities and insolvency firms and follows a call for evidence launched by the Minister last August.

[EXC]

Re: Should the £750 limit for Statutory Demands be increased ?

Excellent and £5000 was the most voted for figure in our poll.

[Amethyst]

Re: Should the £750 limit for Statutory Demands be increased ?

It was, but in essence more people ( 30%+ ) voted for £15,000.

Anyway I think £5000 is the right decision really, I'd have liked to see it higher but it's a million times better than £750.

When they say it has to go through government scrutiny, I assume that means all could change before October 2015.... and also such a long delay in bringing it in might see an increase in the low level scumbuckets sending Stat Demands in the meantime?

[jumper999]

Re: Should the £750 limit for Statutory Demands be increased ?

Good news for many...a little too late for many also.......

[Nibbler]

Re: Should the £750 limit for Statutory Demands be increased ?

When they say it has to go through government scrutiny, I assume that means all could change before October 2015.... and also such a long delay in bringing it in might see an increase in the low level scumbuckets sending Stat Demands in the meantime?

If this was happening a while back, then I would have said they would be likely to go off the chart with new SDs.

Now with the FCA being more strict, and not likely to be happy if DCAs abuse the process in the run up, I would hope any increase would be modest and limited to cases that were close to the threshold anyway, or have good reason where a petition might be a genuine prospect.

Saying that, it only takes one or two DCAs to decide that it's worth risking the FCA's etc wrath, given the potential increase in collections, for there to be a flood of the damn things - considering the numbers of SDs that DCAs like 1st Credit/Connaughts, Lowells and the like have mass sent in the past.

[nemesis45]

Re: Should the £750 limit for Statutory Demands be increased ?

Some of the more " aggressive" DCA's/Debt Purchaser have been warned (By the OFT) about misuse of the BR process and the FCA is of course aware of these warnings and hopefully will act with alacrity!
The conduct of the companies mentioned in Nibblers post included consolidating unrelated debts of individuals so as the be over the threshold and on some occasions just adding spurious " charges" to achieve this.