statutory demand

[applestrawberry]

Hi guys

I am hoping to pick your brains as I have searched on the web and been unable to answer my question so far....

I am having to issue a statutory demand to an individual to recover a debt that he admitts to owing to us.

We are in the process of filling in the relevant forms and are not clear about the interest we can charge on the debt.

We have a letter from the individual that states that they agree to repay the sum, dated the 1st April 2010. To this date we still have not recieved payment although they still acknowledge that they owe the debt. We have complied with the usual proceedure with this, allowing them extra time, giving them plenty of warning of our intention to take this further if the debt is not settled....

Are we able to claim interest on the outstanding debt from that date they first acknowleded the debt in April, until the date we issue the statutory demand?

What would be the standard interest rate used to calculate the interest if we can? would it be usual to use the county court rate?

Seems such a simple question, but cant find a solid answer anywhere and could do without another trip to the solicitors......

hope someone can help

 

[Charlie B ACS]

Presumably there is no contractual interest in your Ts & Cs.

If not you can claim under The late payment of commercial debts (interest) Act 1998. This allows you to claim at 8% over the reference rate, which is set twice yearly, currently 0.5%

If your terms are 30 days from date of invoice, you can claim from the 31st day.

You are also allowed to add "reasonable debt recovery costs" depending on the size of the amount owed.

Size of unpaid debt - Sum to be paid to the creditor
Up to £999.99 - £40.00
£1,000.00 to £9,999.99 - £70.00
£10,000.00 or more - £100.00

If you need more info this website is very helpful: http://payontime.co.uk/

 

[applestrawberry]

Thanks for your reply Charlie

To cut a long story short, the individual unlawfully claimed back money from us under the direct debit guarantee scheme. They admit that they were wrong to have done this, as they were actually still within their contracted period with us. We have proved this, and they agree.

On the original contract that they signed there is no mention of interest to be charged such as you may have on an invoice or similar. So they havent had an invoice as such - we were simply notified by their bank that they had claimed this money from us - our bank were obliged to pay it over,under the DD guarantee scheme - the dispute is between us and the client.
As soon as we realised they had recieved the payment unlawfully, we contacted them to clarify the situation and agree the repayment of the funds to us. They were co-operative and agreed to repay.
Would you think that the date that they agreed to repay would be the one to charge interest from?

We have already reduced the debt by half as a gesture of goodwill,(from £1000 apprx) but as it has now been going on for several months we are losing patience.

Thanks for the link to the site. will have a look.

 

[Steve Thornbury]

I'm sure that the Late Payment Act does not apply to individuals. I would seek some advice first.

 

[Miles Shelbourne]

The point of a statutory demand is to evidence insolvency in the case of a non-paying debtor. Where no payment is made after 21 days from the date of service you can then present a petition for the debtor's bankruptcy - however, to do this the debt has to be not less than £750. By generously halving the debt presumably your debt is now 500... if my reasoning is right, there is no point in your serving the demand, and you may have to simply sue for recovery of your debt - an action in the small claims court.

This is not formal advice as I do not have all facts

 

[Steve Thornbury]

Yes well spotted Miles, it is indeed for debts over £750

 

[Miles Shelbourne]

Cheers Steve... Miles

 

[Geoff T]

I have to agree with previous posters...

Charge the interest at 8% (being the court stated rate of interest you'll find on Money Claims Online), from the date the debt was admitted by the individual, and add on £40 compensation charge. This will be applicable whether the individual is a sole trader or consumer, so you'll be okay...

And do the claim yourself... save the trip - and expense - of a solicitor...

 

[applestrawberry]

Thanks everyone for your replies. I am going to get cracking with this tonight.
Have only been in business a year and so still very much learning...its amazing how much I have learnt from this forum so far....

 

[Alan R Price]

Miles is correct. A statutory demand can only be served if the debt is over £750. And the late payment legislation refers to commercial debts, so I doubt that a claim for damages or fraud, etc. would be covered.