When should a creditor consider bankruptcy?
In appropriate cases the threat of bankruptcy (by serving a statutory demand) can be a swift and forceful method of debt collection. While bankruptcy may have lost much of its historic stigma, it can still have profound effects on the Debtor's personal and business life.
Bankruptcy is not a step that should be taken lightly or where you wish to maintain a commercial relationship with the Debtor. It is appropriate where the debt is disputed or security for the debt is held. Further, where the Debtor is truly impecunious, proceeding to bankruptcy may just leave you as one of many unsecured creditors.
Bankruptcy can also be considered where the Debtor may be hiding assets to avoid judgment. The Official Receiver or Trustee in Bankruptcy has extensive powers to investigate the Debtor's accounts backed up by criminal sanctions.