Bankruptcy law has been with us for centuries. From the moment trading started – businesses and entrepreneurs have faced the highs (and lows) of business life.
Terms from the sea going merchants have been adopted to explain the law – from rise and fall in profits (taken from the rise and fall in tides) – banks ( river banks where you paused) – to the Italian ‘ banca –rupta’ – where the poor trader was humiliated with his bench (banca ) being broken in half as he fell on hard times (rupta – hence ‘bankrupt’).
The days of people being sent to prison for debt are long gone – the horrors of the Marshalsea in Charles Dickens ‘Little Dorrit’ being passed from memory to history in 1834. The last person being hanged for debt in the 1700s.
But bankruptcy law is still there – and enshrined in the 1986 Insolvency Act – where it is still possible to have someone declared bankrupt – or a company placed into liquidation – for failing to pay a debt of £750.
Times are moving though – and as of October 2015 the smallest amount a person (or company) can be declared insolvent (bankrupt for an individual – placed into liquidation for a company) is rising to £5,000.
That figure may stay the same for the next 30 years – who knows. But from October – you have to owe £5,000 or more before you need to fear insolvency.