Best Practices for Serving Statutory Demands for Bankruptcy: Everything You Need to Know

When dealing with debt recovery and insolvency, statutory demands are a powerful tool used to compel debtors to settle what they owe.

Serving these demands correctly is crucial, as mistakes can delay proceedings or render the demand invalid – and if you want to get paid, you don’t want any more delays or for the effort of getting a demand to go to waste.

That’s why it’s important to hire someone well versed in process serving to handle the statutory demand for you. Hiring someone who understands the governing rules, legal nuances, and best practices for serving statutory demands is essential to ensure efficient and lawful service.

If you’re looking for process servers in Lancaster then we can definitely help, including with statutory demand service.

Governing Rules: Insolvency Rules 2016

Statutory demands are the initial step in the insolvency process, governed by The Insolvency (England and Wales) Rules 2016.

To serve statutory demands effectively, it’s vital to follow these rules closely, especially in light of updates from the Practice Directions on Insolvency Proceedings (effective from 24th April 2018).

These strict rules are extremely important in making sure that anything related to insolvency proceedings is kept fair and legal – which is why they must be observed, even when dealing with a debtor who themselves has been acting unlawfully.

What is a Statutory Demand?

A statutory demand is a formal notice that the debtor owes at least £5,000 and must pay or come to an arrangement with the creditor within 21 days.

It is not issued by the court and lacks a court seal or hearing date, but it is an important step in the insolvency process.

Failure to respond to the demand within this period can lead to a bankruptcy petition, making it a critical document in debt recovery.

Key Considerations for Process Servers Regarding Statutory Demands

1. Timely Service

While no set timeframe exists for serving a statutory demand, it should be done promptly to avoid unnecessary delays.

Swift service is especially important in ensuring that the creditor can pursue further legal action if the debtor does not respond within the 21-day deadline.

For that reason, a process server must be able to show that they have tried to serve the demand efficiently and at the earliest reasonable opportunity.

2. Method of Service

According to the Practice Directions, personal service is the preferred method.

If this is not practicable, substituted service (such as posting through the debtor’s letterbox) is permissible, provided sufficient efforts to locate the debtor have been made. The steps required to justify substituted service include:

• At least one personal visit to the debtor’s residence or business address.
• Sending an appointment letter to notify the debtor of a further attempt to serve them personally. The letter must give at least two business days’ notice and should state that failure to attend will result in substituted service.
• Making reasonable inquiries about the debtor’s whereabouts if they are not at the location when attempted service is made.

Private investigators therefore make for excellent process servers in these situations – they can often quickly identify the best address to attempt personal service, so that if it is doomed to fail, the follow-up steps can be taken quickly too.

3. Proof of Service

For personal service, it is critical to complete a Certificate of Service, which must detail the exact time of service and whether it occurred before or after 4:30 pm.

This level of detail is necessary for the courts, as service timings can affect the progression of bankruptcy proceedings.

For letterbox service, the certificate must state when the demand is likely to come to the debtor’s attention.

4. Engaging with the Debtor

At the time of service, the process server must:

• Identify the creditor on the statutory demand.
• Instruct the debtor to carefully read the document and seek independent legal advice.
• Emphasize the importance of the “Warning” section at the top of the document, which outlines the consequences of ignoring the demand.

5. Dealing with Evasive Debtors

When a debtor evades personal service, process servers must follow the steps outlined in the Practice Directions:

• After the first failed attempt, investigators should send a letter notifying the debtor of another scheduled attempt.
• Make inquiries to confirm the debtor’s residency or presence at the address.
• If the debtor continues to evade service, substituted service through the letterbox or by post can be employed.

In particularly tricky cases, the process server can attempt to serve the statutory demand through the debtor’s solicitor, but only for the demand, not for subsequent petitions.

This does mean that the process server needs to engage directly with the debtor’s legal representatives for this to work, in advance of service.

Evasive debtors are not easy to handle, another reason why private investigators often make the best choice for process serving.

6. Serving Multiple Addresses

If the debtor has multiple known addresses, personal visits should be made to all of them to ensure that reasonable steps are taken to locate the debtor.

Courts will look favourably upon efforts made in good faith to serve the document, especially if the investigator can provide comprehensive evidence of these attempts.

Why Use a Private Investigator for Statutory Demands?

As private investigators, we are skilled in locating individuals, even when they attempt to evade service.

Our expertise extends beyond simply delivering documents – we follow all legal requirements to ensure the service of a statutory demand is valid in the eyes of the court.

Our role doesn’t stop at delivering a statutory demand either. We provide detailed reports of each attempt, including time, date, and method of service, ensuring that all steps taken can be presented in court if needed. With statutory demands being a crucial first step toward insolvency or bankruptcy, it’s essential to ensure the process is handled correctly.

For professional assistance with serving statutory demands, or help with process serving in Lancaster of any kind, contact EJM Investigations at 01772 334700. Let us help you ensure your case proceeds smoothly, with the proper documentation and processes followed every step of the way.