Your creditors will naturally want to get back as much of the money owed to them as possible. That means they will usually try a variety of ways to collect some or all the outstanding amount before resorting to more serious measures. The best option is to try to come to some sort of agreement but if there is no deal possible and you cannot pay, creditors have various options when pursuing monies due to them.
One of the options is to serve a Statutory Demand.
A statutory demand is basically the last warning that unless you pay in full, or reach a payment agreement, the creditor will pursue the full payment via court action. You must not ignore a statutory demand. It is the creditor drawing a line in the sand and they will always follow through with further action.
There are several reasons why Creditors use a Statutory Demand. These are as follows:
Once a Statutory Demand has expired (you have 21 days to reply), the creditor can issue a winding-up petition. Whilst this has a cost, it is important to note that some creditors are credit insured and quite often it is a requirement of the insurance to show that the debtor, the company who owes them money, is unable to pay the sums due. A Winding Up Order is a clear way to show this so they can claim on the insurance.
We are also aware that some creditors also do this as a matter of policy. Commonly, this is in a particular trade or profession. The argument is that they want to show to all parties that they will pursue customers to the end in all cases. In many respects, we have seen that this policy works for the creditor as they will often be paid first over other creditors who are less aggressive.
It is vital that you act as soon as possible. The reason for this is that the creditor will advertise the petition. The advertisement will happen at some point between 7 business days after you received the petition and 7 business days before the Court hearing.
The reason this is important is that once the winding-up petition is advertised, the following can happen.
Given the importance of the above, let us look at your options.
As noted above, some creditors will pursue winding-up orders to either claim on credit insurance or prove their point. In these circumstances, the insolvency option is often the only way forward as a payment plan may be very difficult to obtain.
The important thing is to consider the best options and take action. Winding-up orders are important and need dealing with immediately. We are happy to discuss this with you further and offer a free 20-minute initial call to discuss your problems.
Call us for a free initial discussion