Bankruptcy can be an extremely effective means of recovering debts of more than £5,000 for creditors who want to recover sums due quickly and effectively.
Creditors can legitimately be concerned that County Court proceedings will be slow and expensive, leading them to turn to the Insolvency regime – which applies in different forms to debtor companies and individuals – to apply pressure to gain payment of outstanding debts.
For personal insolvency – bankruptcy – the first step is service of a statutory demand, a written notice in a prescribed form demanding payment of a debt.
The demand has to be personally served on the debtor by a process server, which we can arrange for you.
Being served with a statutory demand itself increases pressure on the debtor – they have 21 days either to come to an arrangement with the creditor to pay, apply to court to have the demand set aside, or leave themselves open to a bankruptcy petition being issued against them.
Should payment not be received as a result of the statutory demand, the creditor can issue a bankruptcy petition in the debtor’s local court, and serve it on the debtor. This further increases the pressure to pay, as a court date is set when the petition is issued, giving a deadline for possible bankruptcy – which would result in all the debtor’s assets being transferred to his trustee in bankruptcy, a ban on company directorships and the inevitable effects on his credit record.
We can help you with the preparation and presentation of the bankruptcy petition, will arrange for personal service by a process server and can arrange representation by a solicitor at the bankruptcy hearing.
We will also manage any negotiations with the debtor on your behalf, seeking to obtain payment of the debt before the bankruptcy hearing.
The costs involved in issuing a bankruptcy petition are substantial. Although the petitioner’s costs are paid out of the bankrupt’s estate in priority to his general debts, issuing a petition is not a decision to take lightly.
We will undertake research on the debtor’s assets – for example, through title searches on any property he may own – so that we can ascertain, as far as possible, that there is a good chance of recovery of your costs and at least some of the debt.