Stat Demand

[businessadvicepls]

Hi All,

Is it a legal requirement to have to issue any form of notification/attempt to collect a debt prior to issuing a Statutory Demand?

I and many others are in total agreement that an SD is the most effective method of collection however are their any rules/would a court see it as bad practice not to have formally tried to collect the debt first without giving any warning of impending action (being stat demand)

Thanks in advance for the advice.

 

[businessadvicepls]

Ps .. I've read all the links and sites on stat demands but it does not clearly answer the options/law/protocols prior to the issue of the stat demand.

 

[Charlie B ACS]

The courts generally frown upon using Stat Demands & the bankruptcy process as a debt collection method.

To be honest though, why would you go to the expense of a SD & getting it served, when making a few phone calls could get the matter resolved a lot quicker & cheaper.

As part of protocol, a Letter before action is normally sent, giving 7 days notice of legal action.

an SD as the start of chasing will lose you customers very quickly. Talk about a Sledgehammer to crack a nut

 

[Judge's Demand]

Hi,

In a word no you are not legally obliged to issue any formal warning that you are going to issue a Statutory Demand as the Statutory Demand is basically a formal 21 day notice of insolvency proceedings.

Are you aware that this form has to be personally served by a licensed process server for it to be valid.?

I am the Partner of a company named Judge's Demand and if you need any help or further assistance with this please feel free to private message me or look us up at www.judgesdemand.co.uk

Regards
Nick

 

[TangerineDream]

Spoke to Mike but he was just heading into a meeting. He gave me his mobile to call 10.30 am Friday. He will be working from home.

Stat demands have served me well in the past. I choose when to use them as they are of last resort and will destroy any relationship from your buyer.... But when needs must and companies refuse point blank to make a payment this gets them back in line asap

 

[Stuart Bailey]

if the stat demand remains unpaid you can aplpy to court for a bankruptcy order. They may look into your invoices and letters for requesting payment.

If you go to court you are supposed to take steps to prevent it from going to court in the first place ie serving seven date letters.

So if you aplpy for a bankruptcy petition and havent issued at the very least a seven day letter you could be on a sticky wicket

 

[Anthony Reeves]

I was interested to read the post re Statutory Demands.

You do not have to issue a letter before sending a statutory demand but I believe it would be very unwise not to have entered into correspondence before doing so if you later sought to recover costs.

The issue of a statutory demand is required before you can petition for the bankruptcy of an individual. If there is a real dispute then it is not appropriate to use a statutory demand as the defendant would have grounds to apply to set it aside. It would be wise to enter into some correspondence before issuing a statutory demand as I would believe a court would not look favourably when asking for costs if you did not attempt alternative methods of resolving the issue before resorting to legal action. With regards to companies, it is not necessary to issue a statutory demand before presenting a winding up petition. However, one would expect to have put the company on notice of the intention to present a petition before doing so as again you would face difficulty in seeking costs if you did not.

The comments about courts frowning on insolvency as a methods of debt collection is quite true. There are cases from the Court of Appeal that believe that it is appropriate to obtain a Judgment before going down the insolvency route. If there is a real dispute and the creditor knew or ought to have known of the dispute, then a court can penalise the creditor or their solicitor personally if it sets aside the demand following an application form the debtor.

You do not have to use a licenced process server for a statutory demand to be validly served. The Insolvency Rules actually state that you should take all reasonable steps to bring the demand to the attention of the debtor. In many cases this will mean personally serving the demand.

If you do not go the route of statutory demand, and I would advise against doing so unless there is clearly no dispute such as where the debtor has admitted the debt, then before commenicng court action to obtain a judgment you should follow the pre-action pre-action protocol in the court rules which includes sending a formal letter of claim to the debtor. You should beware that if you are a business chasing a consumer then the letter of claim must contain certain things and is not just simply "pay up in 7 days or else you start legal action" letter. An example of the information of what a business must include in the letter to a consumer is where the consumer can obtain independent advice. Details are included in the pre-action protocols of the the Civil Procedure Rules.

As to whether a Statutory Demand is the best method of collecting debts, this in my view depends on the circumstances of the debtor. If the debtor is a company and has assets and clearly wishes to continue trading then it can be a useful tool especially because of the insolvency rules about what property a company can dispose of after the presentation of a petition. However, the deposit to the Official Receiver required to be paid when issuing a petition for bankruptcy and winding up has increased and it is quite expensive.

Anthony Reeves
Pinniger Finch & Co Solicitors