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Unpopular demand

DJ Julie Exton examines some common mistakes in the use of statutory demands in debt collection and advises how to get it right

5 December 2011

Despite the exhortation that bankruptcy proceedings are not to be used for the purpose of debt collection, the use of statutory demands is widespread and, of course, often effective. But it is not unknown for the odd mistake or misunderstanding to creep in.

A debtor will be deemed to be unable to pay his debts if he fails to meet either sort of demand in the prescribed form served on him within three weeks. A bankruptcy petition can then be presented.

Until the presentation of a bankruptcy petition, however, there are no proceedings. Accordingly, a statutory demand is not a court document and there is no power, say, to make an order for substituted service. Instead, the provisions of Insolvency Rules 1986 (IR) 6.3 and 6.11 should be observed. Advertisement of the demand is generally not an acceptable form of service.

Setting aside

Remember the forms must be signed by an individual, not an organisation (Dacorum Borough Council v Horn...

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