Do It Yourself Debt Collection

How to use a statutory demand

Why use a statutory demand?

There is nothing, but nothing that concentrates someone's mind more than prospective wipe-out.

If you issue a statutory demand, you can follow it up 21 days later with a bankruptcy petition (if you serve it on an individual) or winding up petition (if you serve it on a company).

Of course, if you have done your homework, you never need to issue the petition because the statutory demand is enough.

The reason why a statutory demand is so powerful is that the mere issue of a petition, no matter how easily dismissed, triggers a domino effect on borrowing and many other agreements. Many legal agreements, particularly those related to credit and mortgages, contain a provision that enables the creditor to call in the loan if the debtor has a petition for bankruptcy issued against him. So your enthusiastic debt collection really could wipe out the largest of companies even for a relatively small amount.

It used to be difficult for a third party to know about your petition. The Internet has changed all that. If you publish a copy of a petition in the right place, and tell a few banks for good measure, you are spelling disaster for your debtor.

The law assumes that a statutory demand merely paves the way for a petition. But it can be an incredibly powerful debt-collecting device without you even setting eyes on a petition.

What is more, the procedure is very easy to follow. All you need are a couple of forms and a first class stamp - no solicitors and no court fees.

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