Statutory Demand realises debt

How the threat of insolvency against a debtor helped a client realise a bad debt.

The situation

A local solicitor approached Clive Purdy, partner in charge of Atherton Bailey's Southend-on-Sea office, about problems realising a debt from a rogue builder. The solicitor had obtained a County Court judgement against the builder, but the debt was still unpaid.

What we did

We advised the client to issue a Statutory Demand which they did with our assistance. A Statutory Demand is a formal notice to the creditor giving him three weeks to pay the debt or make an application to Court to say why it's not due. If he does neither, he can then be made bankrupt.

We arranged for the Statutory Demand to be served by a process server, so there could be no doubts that he had received it and having finally tracked down the debtor, he seemed somewhat surprised our client wanted paying. But when we threatened him with bankruptcy, he realised the gravity of his situation and sought advice. Not surprisingly, the builder was advised he had to pay and with the overhanging real threat of bankruptcy, he finally paid our client all the debt and costs.

The result

This is a case where the inside knowledge of insolvency law and practice paid off. Not all solicitors know the ins and outs and techniques of robust debt collecting practice, whereas we have day to day familiarity which we can use to help clients.