When pursuing a debt, creditors can explore multiple strategies for repayment. These could include going to court and acquiring a judgment that would then be leveraged against the debtor’s assets in various forms, such as warrants of control, writs, or charges on property owned by them. Each approach offers distinct advantages depending on the circumstances; however, all provide an avenue toward regaining due compensation.
When a debtor fails to pay, creditors have various means of recovering the debt. One effective route is filing a ‘money claim’ and obtaining a court judgment. The creditor can then enforce payment by utilizing several tools including seizing assets or securing charges over any possessions owned by the debtor such as real estate property.
Disputes over unpaid debt can be costly both emotionally and financially, as it takes time to resolve the matter. This not only causes frustration for creditors but could also lead to cashflow difficulties while they wait on long-term resolution of their demands.
Bankruptcy petition: issuing a winding-up petition
If attempts to recoup unpaid debts from individuals or companies are unsuccessful, then filing a bankruptcy petition for sums exceeding £5,000 (individuals) or issuing a winding-up petition for amounts greater than £750(companies), could be an effective solution.
Such drastic measures should only be taken when all other avenues of obtaining payment have been exhausted. If a money claim doesn’t produce the desired payment, an alternative might be to file for bankruptcy or dissolve their business. The minimum debt must exceed £5,000 for individuals and £750 for businesses in order to qualify.
Winding up proceedings for Warrants of control
To initiate winding up proceedings, creditors must demonstrate that an undisputed liquidated sum is due for payment. A statutory demand may be used to do this but it’s not necessary; instead, a simple payment request will suffice. Once the petition has been issued, however, debtors should note there is a mandatory 21-day waiting period before action can be taken in court. When claiming a sum of money in an insolvency petition, it must be for an undisputed amount. A statutory demand can precede either type of process but is optional prior to the winding up court – should this step be undertaken, 21 days from service on the debtor are required before submitting the application.
A winding up petition is an effective legal action for pursuing the repayment of debt from an insolvent debtor. A statutory demand may be issued prior to filing a petition, but it’s not compulsory; in fact, creditors can request payment without one. Though if such demands are made clear and undisputed sums due have fallen overdue, then the court will allow proceedings—the emphasis being on debts that stand firm rather than those with the substantial dispute or genuine grounds attached to them.
Insolvency Service
When attempting to recover a disputed debt, creditors must take extreme caution. Presenting a petition carelessly could lead to an adverse costs order being imposed by the court against them. Therefore, it is essential for those in pursuit of repayment to seek expert advice first and be aware of all potential expenses involved – such as process server fees and advertisement costs – that may come with presenting a petition or winding up/bankruptcy orders along with their respective Insolvency Service deposits.
Presenting a petition in respect of an unresolved debt could result in costly repercussions. It is vital to obtain specialist advice prior, as the court may issue adverse costs against creditors that take advantage of this process for disputed debts. Should you choose to pursue this avenue, there are several monetary components involved; including but not limited to: a £280 fee for presenting the petition itself and deposits paid towards Insolvency Service administration fees upon successful issuing – plus any additional disbursements related charges such as legal or advertisement services.
Creditors will soon be subject to higher fees when presenting bankruptcy or winding up petitions after 1 November 2022. Five years since the last increase in 2016, these significant fee increases of over 50% – from £990 to £1,500 for creditor bankruptcies and from £1,600 rising to a hefty 2£2 600 for creditors’ wind-ups – could potentially deter smaller debtors who have previously been using these processes as a course of action.
Insolvency legislation
When executing a Warrants of Control, enforcement agents are legally mandated to keep any proceeds from goods they sell or money that is paid in lieu. This particular requirement stems from the Insolvency Act 1986 and other related insolvency legislation.
The enforcement agent is committed to speedily informing both the creditor and courts of any developments, such as a sale or financial transfers. This ensures that all parties are kept abreast of relevant updates in a timely manner.
The enforcement agent will quickly take action, providing notification to the creditor and court as soon as funds are collected.
An enforcement agent is dispatched to fulfil the legal requirement of executing a warrant. An enforcement agent was entrusted with the task of executing a court-ordered warrant, ensuring justice is properly served.
receives notice that
receives notice that—
- a bankruptcy order has been made against the debtor; or
if the debtor is a company—
- a provisional liquidator has been appointed; or
- an order has been made or a resolution passed for the winding up of the company;
- withdraws from possession of goods seized; or
pays over to—
- the official receiver or trustee in bankruptcy; or
- if the debtor is a company, the liquidator,
When goods are sold under a warrant, or money is paid to prevent seizure, any proceeds from the sale or payment can be used to partially satisfy the terms of said warrant.
Profits from the sale of goods seized under warrant, any payments made to avert seizure or funds received in partial repayment of a debt are all subject to this clause.
An enforcement agent has the immensely important task of delivering a notice to both their creditor and the court. It is critical that this process occurs accurately, for it will affect all subsequent steps in debt collection proceedings.
