As a Debtologist I’m often asked:

"What’s the point of Bankruptcy?"

When someone owes more than £750 bankruptcy action can be considered as an option, likewise if a company owes the money you can issue a winding up notice. The pro’s & con’s make interesting reading and the reasons behind taking or not taking action should be considered along with the consequences.

The first thing that should be realised is that taking the ultimate action against your debtor is that bankruptcy/winding up does not mean you will receive any money and all that you may actually achieve is satisfaction.

Before you take any legal action consider consider both the positive and negative results of your actions. The positive side is that by taking action you may collect the money you are owed. The negative is that you may not. More important it could cost many thousands of pounds to stop your debtor owing money to any other business.

So how do you make someone bankrupt or in the case of a business issue a Winding Up notice. Well it is relatively simple and it is something a debt collection agency can do or you can do yourself, in fact a court officer would be able to help you fill in the forms. The first thing you should do, once all possibility of settlement has been exhausted is write to your debtor giving them a final warning that unless they settle you will take legal action against them. Provided that the debt is not disputed and they owe more than £750 then action can be started.

Regardless of the status of the debtor (company or individual) a Statutory Demand has to be issued. Once issued, the defendant will have 21 days to respond or you can start either the bankruptcy procedures or Wind-Up the company.

When writing to a company notify them that a Winding-Up notice would be issued pursuant to section 122(1) (F) of The Insolvency Act, 1986, due to the company’s inability to pay its debts as they fall due.

However, you should be aware that by issuing a Statutory Demand you are leaving yourself open to a myriad of possible implications and costs as well as disappointment. The first thing you should be aware of is if your debtor is based in a different area of the country and the debtor issues a defence, the case will be heard in the defendants nearest court. Secondly, if your debtor issues a defence or disputes the debt, you will need to a) answer any defence & b) attend the appointed court, even if the debtor doesn’t.

So far this action is no different from issuing a County Court Summons. However there are some differences, the first is you pay for a summons prior to it being served. In the case of a Statutory Demand you are entitled to issue the Demand but you will only have to pay if the debtor enters a dispute. The fees for all legal actions are given out on the HM Courts website. As I have pointed out, winning a court case does not mean that your debtor will be declared Bankrupt or Wound-Up as they will still be able to appeal to have any decision set aside. If you are still determined to take action, the forms are available from www.hmcourts-service.gov.uk. My advice would be before taking any legal action take advice from either a debt collector or lawyer.

For further information please visit our website: www.deanemcollections.co.uk