Charges for Payment & Statutory Demands
Charge for Payment
In order to petition for the sequestration of an individual (see sequestration) a creditor must first constitute the apparent insolvency of the debtor (section 5(2B) Bankruptcy (Scotland) Act 1985). This means that they must demonstrate that the debtor is unable to pay their debts as they fall due. The easiest way to demonstrate apparent insolvency is to serve a charge for payment on the debtor. This will state that if payment is not made within 14 days of service of the charge then the creditor will be able to proceed to sequestrate the debtor (section 7 Bankruptcy (Scotland) Act 1985).
Service of the Charge for Payment will likely be made by Sheriff Officer, delivered to the debtor’s place of residence or work. It will state at the top that it is a Charge for Payment. The 14 day period will begin to run from the day that it is served. The only way to counteract a charge for payment is to either dispute the debt (or any part of the debt) or to pay the debt in full. It is only possible to dispute the debt in court. As no hearing will be arranged in relation to the charge for payment is recommended that you write to the creditor demonstrating that the debt is not due. It is highly advisable to seek advice in relation to writing to a creditor in response to a charge for payment.
A Charge for Payment is often used by creditors as a threat to debtors to demonstrate that they intend to pursue the debt to the fullest extent possible, ultimately leading to sequestration. If the Charge for Payment is accompanied by a Debt Advice and Information Package (DAIP) it is likely that creditor is intending to sequestrate the debtor if they fail to pay.
The Charge for Payment will include a summary of the debt that is due and is a prima facie account of the sums owed by the debtor. It is essential to verify the amount noted on the Charge for Payment and dispute any amounts which are not due.
Statutory Demand
A Statutory Demand is similar to a charge for payment and will be served in the same way. Statutory Demands apply in England and are used to constitute insolvency in the same way as Charge for Payments. A debtor has 18 days to respond to a Statutory Demand. In order to dispute the debt you will have to apply in court. Statutory Demands usually fall under the jurisdiction of English courts so it is advisable to speak to a solicitor to see how to respond.
The Charge for Payment will include a summary of the debt that is due and is a prima facie account of the sums owed by the debtor. It is essential to verify the amount noted on the Charge for Payment and dispute any amounts which are not due.