Released every month our debt collection blog contains news, stories and tips to keep you informed.
When should I use bankruptcy action to collect a debt against a company?
In the debt collection process, bankruptcy is but one available debt collection tool that can be pursued in the recovery of a bad debt. When taking action against a company, you are commencing winding up proceedings.
This article seeks to explore in what circumstances creditors should pursue this debt collection tool.
Firstly, a debt needs to be above the minimum statutory limit amount which is $5,000. This was raised from $2,000 with the introduction of the Bankruptcy Amendment Act (2010). However, just because your debt is over this amount, does not mean you should necessarily consider Bankruptcy action.
Commencing the Bankruptcy process is expensive, so before you start your action, you should read this article in full.