Statutory demand - a powerful debt collecting method

 

By Hasnain Shah

Most people turn their attention directly towards litigation when an outstanding amount of money is owed to them by a debtor. An often overlooked but effective alternative to retrieving a debt is through filing a statutory demand. A statutory demand is a written formal request to a person or business that owes you money for the payment of the debt.
There are some basic legal requirements that must be met if a statutory demand can be served for the debt in question. The amount owing to you must not be less then £750 and the debt must be undisputed.

Serving a statutory demand is the first step towards to making an individual or business bankrupt. When the debtor receives the statutory demand, they have 21 days to either settle the debt or reach an agreement with you for deferred payment. If you’re satisfied with the response from the other side you can ask the court to set aside or dismiss the demand within 18 days of serving.

If however, the debt has not been satisfied after 21 days, you can present a petition to the court for a bankruptcy order (winding up order if the debtor is a company). If successful, the debtor’s assets can be sold to pay off the outstanding debts.

Typically, with the threat of bankruptcy looming and all the associated negatives that come with it, the debtor will often make good the owed payments. Therefore, in many instances, the process does not go beyond the first stage of the statutory demand, as the debtor will be keen to make an acceptable arrangement rather then face bankruptcy. For this reason, a statutory demand is a very powerful and effective debt collecting method.

Provided you believe that the debt is contractually due to you without dispute, then serving a statutory demand may be the best initial option for you. For individuals or companies that have the means to pay but are simply delaying payment or totally ignoring you, it can be a way of getting their attention and ensuring they repay the debt.

If you would like to be put in touch with an insolvency solicitor to assist you in serving a statutory demand, please call Contact Law free on 0800 1777 162 or fill out the web-form.

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