If you are unable to pay your debts and have not reached an agreement with a creditor, the creditor may apply to make you bankrupt, if you owe £750 or more. Creditors can join together if they are owed £750 or more in total.
Creditors are likely to decide to make you bankrupt if there is land or property, for example, a house, which will be sold if you are bankrupt, but which would not be sold for the benefit of creditors using ordinary debt enforcement procedures.
Creditors may also want to make you bankrupt if they:
The creditor must start with the issuing of what is known as the ‘statutory demand’. The statutory demand must contain details of the amount claimed, the implications for non-compliance with the demand for payment, and details of who should be contact if the debtor wishes to come to an arrangement with the creditor. The statutory demand is essentially the method by which the creditor declares to the court that the debt is owed. Once the court is satisfied with this, it can allow the creditor permission to present a ‘bankruptcy petition’.
The demand must also contain details of how to apply to have it set aside. This can be attempted and would have better success if the creditor has not obtained a County Court Judgment first. Any application for set aside must be made very quickly as the time limit is 18 days from the date of service. The application must be made on the relevant form and supported by an affidavit stating the date on which the demand came into your hand and the grounds on which the application is made.
We are not about to give all our secrets away, but there are number of options available to you if you have received a statutory demand. If you want to learn more on how to avoid bankruptcy, call our consultants: