Dealing with a creditor petition

Dealing with a creditor petition

• Dealing with a statutory demand
• Statutory moratorium on diligence
• Application for a Debt Payment Programme
• Apply for a continuation at court

Dealing with a statutory demand

A statutory demand should be served personally on the client by a sheriff officer or messenger-at-arms together with an additional copy of the demand.

If your client receives a statutory demand,1legislation.gov.uk/ssi/2016/397/schedule/1 they have the option of admitting the debt or denying the debt.

Unlike a charge for payment, a creditor does not need to have taken the client to court for the debt. They can simply serve a statutory demand and wait until the 21 days expire, constituting apparent insolvency, then petition for the client’s sequestration.

The easiest way to deal with a statutory demand is to deny the debt and send the form back to the creditor. This sent be done by recorded delivery and arrive at the creditor no later than three weeks after the date of service. In this scenario, the creditor must proceed through the normal court process allowing the client to deal with it according to the court regulations.

If your client does not respond, the creditor begins sequestration proceedings through the sheriff court. So, ensure that your client responds accordingly within the set time.

 

1     legislation.gov.uk/ssi/2016/397/schedule/1 »

Statutory moratorium on diligence

Where a statutory demand or charge for payment has been served and expired, and your client has not responded, but no proceedings have yet been started, you may consider applying for a statutory moratorium on diligence.

The moratorium stops any bankruptcy proceedings against your client and specifically the presentation of a petition for your client’s sequestration.1s197(3)(c) B(S)A 2016

You then have six months to work out a suitable debt solution for your client without the fear of a petition for sequestration being awarded.

 

1     s197(3)(c) B(S)A 2016 »

Application for a Debt Payment Programme

Once a DPP has been applied for, and it includes the debt craved for in the application, a creditor cannot serve a petition for sequestration for six weeks after the client’s intimation to apply has been entered in the DAS register. Once approved, the petition is halted and if the client defaults on the DPP and it is revoked, the creditor can restart the proceedings.1Reg 30 DAS(S) Regs

If the DPP application is rejected, there are a further 14 days for applying for a review and then another 28 days for the review to be considered.

When a DPP is awarded, it is not competent to petition for a client’s sequestration.2s4(3) DAA(S) Act 2002

 

1     Reg 30 DAS(S) Regs »

2     s4(3) DAA(S) Act 2002 »

Apply for a continuation at court

If the client has already been presented with a petition and the case is calling at court, it is too late to apply for a statutory moratorium. You could ask for a continuation of the case for a maximum of 42 days to allow you time to make an application for a DPP. This is at the sheriff’s discretion.1s23 (3) B(S)A 2016

 

1     s23 (3) B(S)A 2016 »