Redwood Collections are Threatening Bankruptcy
Here is a letter that a client received for Redwood Collection threatening bankruptcy
“Should we not hear from you within the time-frame suggested this matter will be escalated for further action, including the issue of a Statutory Demand under the Insolvency Act 1986 (Bankruptcy).“
Should the Threat of a Company be Taken Seriously
In general the threat of being made bankrupt should be taken seriously, so as usual you really do need to take advice on what to do. Only you know your situation and whether or not you have any assets that need protecting. If you say for example own a property that has a good amount of equity, then you would consider this as more serious than if you were say, only renting a property, or the property has little or no equity. It is not unusual for companies to send out this sort of letter, where the intention is only for you to actually get in touch with them. So the more scary they make the letter, the more chance of getting the debtor to make contact.
Seek Debt Advice
Get free debt advice is a great way to take control of your finances and get on top of your debt. It can help you create a budget and learn how to prioritise your debt payments. A free debt advisor can provide you with support and information on how to manage your debt. They can help you negotiate with creditors and create a repayment plan that works for you. It is important to remember that debt problems do not go away on their own. Taking action to get free debt advice is the first step in getting your finances back on track.
This Threat of Bankruptcy is Probably Just a Threat
However, in this particular case I wonder if the company will actually follow through with a bankruptcy petition.
Why Redwood Collections would not benefit from making this person bankrupt:
The outstanding debt is for £957.44.
The current cost of submitting a bankruptcy petition is £450 Official Receiver fees, plus £150 court fees.
Therefore it would cost Redwood Collections £600 plus any administration/solicitor fees.
The client has no assets and living in rented accommodation.
The client has very little disposable income left at the end of each month. They cannot even afford the court fees to make themselves bankrupt.
So if Redwood Collections work to make this person bankrupt, they would be spending a lot of money and get zero return for using this process.
In this particular case Redwood Collections have not really done their homework.
If you are a property owner or have any asset, then the threat of bankruptcy can be a very serious matter!! You must act.