If you are owed money, the threat of making the debtor bankrupt may persuade them to pay.
Can you make someone bankrupt?
The threat to make someone bankrupt is only likely to be taken seriously if you have the ability to do so if they do not pay. The question is: can you make them bankrupt? The answer is that you can do so if the person owes you a debt which is:
- Unsecured (or it is secured but you are willing to give up the security)
- More than £5,000 and
- The debtor appears to be unable to pay or has no reasonable prospect of doing so.
Proving that the person cannot pay
There are only 2 ways that the law allows you to prove that the person cannot pay the debt:
- You have a Judgment against them and you have tried to enforce this but this has failed to recover the money.
- You have served a Statutory Demand in the proper form and this has not been complied with.
If one of these conditions is met, the fact that the debtor may be solvent cannot be used as a defence to bankruptcy. If they cannot pay the debt, or choose not to, they can be made bankrupt.
Taking legal advice
There can be a number of legal problems that may arise when you are trying to make someone bankrupt including:
- Is the threat of bankruptcy the best way to recover the debt?
- Is the debt really undisputed?
- Should you give up any security you are holding?
- Is the statutory demand correctly completed?
- Is the statutory demand correctly served?
- What happens if the debtor tries to avoid service of documents?
- What happens if the debtor challenges the statutory demand?
Our solicitors are happy to advise on these and other legal issues in connection with making someone bankrupt.
For more information proceed to Serving a Statutory Demand