Clients are always asking me how best to recover an alleged debt from their customers.
The response raised in the attached article is not uncommon when conversations related to money and clients become heated.
Sometimes the best way to consider going forward is to assess what is more important to their "Debtor"... Is it to retain the business as a going concern?
If the answer to this question is yes it may be prudent to consider serving a statutory demand...
This is only advisable in circumstances where the debt is not disputed. In the attached article it is evident that the "Debtor" had an arguable way to dispute the matter. This is a very important consideration because of there is an arguable defence the "Debtor" would be able to apply to set aside the statutory demand or apply for an injunction to prevent the winding up or petition.
If the "Debtor" is successful with either course of action you will be in no better position than you were prior to the demand been served, in fact, the Creditor is likely to be in a worse position.
If the debt is disputed and there are grounds on which to dispute the debt a statutory demand could be end up being costly for the creditor.
A Creditor, serving a statutory demand for a disputed debt, will be taking a big risk on costs, if they do not withdraw it, if a "Debtor" has raised an arguable defence.
Don’t consider using a statutory demand instead of a county court claim unless the debt really is undisputed. Statutory demands are not supposed to be used as a debt collection tool. In reality many creditors use them exactly in this way.
Do remember that if a creditor persists with a statutory demand and the "Debtor" gets the demand set aside or an injunction against the presentation of a winding up petition then the court is likely to hammer the creditor when the issue of costs is addressed, even if the creditor subsequently wins the dispute/counterclaim in normal proceedings.
If determined that statutory demand is not the best route forward you should consider issuing a debt claim.
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He never even visited the shop, nor heard of the firms demanding the money but the letter threatened him with court action and bankruptcy if he didn't pay up within 21 days. Usually it's enough to tell the firm or debt collector it has made a mistake but when Ibrahim called Mishcon de Reya the following day, the firm was adamant it had got the right person.