It is often frustrating for creditors to have to wait months on end for payment of outstanding debts. Waiting for a County Court money claim to be dealt with can often take many months and the period of time which elapses between commencement and determination of such a claim can often put an incredible financial strain on a business.
Creditors are often now seeking to employ an alternative process in order to recoup unpaid debts and in many cases are finding that the insolvency procedure is an effective way of reaching a resolution (often to the satisfaction of the creditor) much quicker than would otherwise be possible.
Statutory demand: the benefits
As has been set out in an earlier article – ‘Statutory Demands: 1/3’ – an alternative to the typical County Court money claim process is the service of a statutory demand on an individual.
A statutory demand is attractive to a creditor because, should the demanded amount remain unpaid for more than three weeks, the statutory demand can be used in order to support a bankruptcy petition on the grounds that the debtor is unable to pay his or her debts.
Can the debtor pay?
In order to be in a position to present a petition, a creditor must be able to show that the debtor appears to be unable to pay the debt or have no reasonable prospect of being able to pay the debt and that the debt is for a liquidated sum of £5,000 or more, payable immediately or at some time in the future and is unsecured.
It is unsurprising that, on occasions where the debtor might otherwise have sought to drag out the matter over a year or so in the County Court, the possibility of being in a position to issue a bankruptcy petition just over three weeks after the service of a statutory demand is advantageous to a debtor client who wants his money soon. Of course there are various practical considerations to take into account and it is always advisable to seek legal advice before embarking on either the County Court money claims procedure or the statutory demand/bankruptcy route.
If you have received a statutory demand or in the event that you would like to discuss the possibility of serving a statutory demand on a debtor, please contact our litigation solicitors in Leeds, Wakefield, Bradford andManchester on 0113 2449931.