Making someone bankrupt
How to make someone bankrupt
Someone who owes me money will not repay it. What action could I take?
There are a variety of ways to try to claim money owed to you. This includes serving a statutory demand on the debtor or issuing a claim in the court for judgment. You can get full details from the court on how to make a claim for money due.
You could also find the information on the HM Courts and Tribunals Service website at:
http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/index.htm
What is a judgment?
A judgment is a court order that says that the money is owed to you. It has on it a date by which the debt is to be paid. If it is not paid or disputed, you can apply to the court for a warrant of execution. This is where a bailiff tries to recover the money or enough assets belonging to the debtor to be sold to clear the debt. The court can also make an order for an attachment of earnings. This is where the debtor’s employers pay money directly to you.
You can get the forms from the court, or from the HM Courts and Tribunals Service website at:
http://www.justice.gov.uk/forms
How much does it cost to issue a claim for judgment?
To issue a claim for judgment, the court fees vary depending on the amount of the claim. You should contact the court to find out the precise court fee payable for your claim.
What is a statutory demand?
A statutory demand is a written demand on a standard form asking for payment of the money. If the debtor does not ask the court to set the demand aside within 18 days, or it is not paid within 21 days, you can present a petition to the court for bankruptcy or winding-up if the debt is equal to or exceeds £750. You can get the form free from our website in the ‘Forms’ section, or from a legal stationer.
How much does it cost to serve a statutory demand?
The court is not involved in issuing a statutory demand, so there is no court fee. You would get a copy of the appropriate form from our website, or a legal stationer, fill in the details and serve it upon the person owing the money. As you would need proof of service of the statutory demand it is usual to use a process server. The charge for this service would vary. Process servers can be found in the yellow pages under 'detective agencies'.
How do I make someone bankrupt?
To make someone bankrupt, you have to present a bankruptcy petition to the court, and prove that you are owed at least £750. You can show this by having an unpaid statutory demand or an unsatisfied execution of judgment, and you have to pay a £700 deposit, plus £220 court fee. It is usual to instruct a solicitor when trying to make someone bankrupt, because of its legal nature.
The forms you need to make someone bankrupt are can be found on our website at in ‘Forms’ then ‘Forms for England and Wales’.
What forms must I use to serve a statutory demand?
If an individual owes you money, the forms you need to use are:
• Form 6.1 (DOC, 50 Kb) – for a debt of a specific amount that is payable now.
• Form 6.2 (DOC, 50 Kb) – for a debt of a specific amount that is payable now following a judgment or court order.
• Form 6.3 (DOC, 48 Kb) – for a debt that is payable in the future.
You can get the forms for a statutory demand from a legal stationer or from The Insolvency Service website.
Do I always have to serve a statutory demand?
No. If you have previously got a court order that the money must be paid (judgment), you can ask the court to enforce it. Information on enforcement is available in the Courts Service leaflet EX321 ‘I have a judgment but the defendant hasn’t paid – What can I do?’. You can get this leaflet from your local county court or from the Ministry of Justice website: http://www.justice.gov.uk/forms
You can present a bankruptcy petition without serving a statutory demand
if:
- enforcement fails to get some or all of the money; and
- the debt is equal to or exceeds £750.
How should I serve a statutory demand?
You must do everything you can to bring the statutory demand to the attention of the person concerned. If possible you should serve it personally on them. You can employ a process server to do this for you. Process servers can be found in the yellow pages under 'detective agencies'.
If you cannot serve the demand like that because the person is keeping out of the way to avoid service, there are some alternatives:
- You can send the statutory demand by first-class post or put it through the person’s letterbox. If you do this and then go on to present a bankruptcy petition, you will need to sign a statement of truth saying how you served the statutory demand. You will also have to say how you served the statutory demand and give the date you believe the debtor would have seen it.
- You may advertise the statutory demand in any way you think appropriate if:
- the money is owed under a judgment or order of court; and you know, or believe, that the debtor has left their address or is keeping out of your way to avoid service; and
- you believe that you would not be able to recover the money by enforcing the court order.
Do I need proof that I have served a statutory demand?
Yes, you will need proof of service if the debtor does not pay the statutory demand and you intend to present a bankruptcy petition. So it is usual to employ a process server to provide such proof (listed in Yellow Pages under ‘Detective agencies’).
If a bankruptcy petition is based on a statutory demand, a certificate of service and statement of truth giving details of service of the statutory demand must be filed at court with the petition. These must be signed either by you – if you served the demand – or by your representative if someone else served it.
For more details on proving you have served a statutory demand see ‘Statutory Demands (DOC, 784 Kb) ’.
How do I serve a statutory demand abroad?
A statutory demand is not a document issued by the court, so you do not need to ask the court’s permission to serve it abroad. You should serve it in the same way as you would do in this country. When a statutory demand is served abroad, the time limit to comply with the demand is 28 days. The time limit for application to set aside the demand is 22 days. There are some restrictions on you being able to present a bankruptcy petition if a debtor who lives abroad fails to comply with a statutory demand:
- If the debtor lives in one of the member states of the European Union (EU) - apart from Denmark, you will not be able to present a bankruptcy petition against that person if they carry on business or earn their living in that EU country.
- If the person is retired or unemployed, the court will look at the place where they normally live. You have to make the person bankrupt under the law of the country where they normally work or live.
- If the debtor lives in a country that is not in the EU, or if they live in Denmark, then you will be able to present a bankruptcy petition only if they have lived or had a residence here, or carried on business here, at any time in the 3 years before the date you present the bankruptcy petition. The only exception is if they are in England and Wales on that day.
Does a statutory demand expire?
There is no expiry period for a statutory demand. However, under the Limitation Act 1980, a debt must not be more than 6 years old or based on a default judgment more than 6 years old. This period can start to run again from any date the debtor agrees the debt exists and may be extended more than once. You may need legal advice if you think the debt is affected by this time limit.
Where can I get specific advice about dealing with someone who owes me money?
Before you take any action to put someone into bankruptcy, you should get your own legal or financial advice about bankruptcy and the other options available to you. The Insolvency Service and the courts cannot advise on specific insolvency problems, for example whether you should make someone bankrupt or whether you should look at alternatives. You can get advice from your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, a reputable financial adviser, or
a debt advice centre.
In which court should I present a bankruptcy petition?
Not all courts can deal with bankruptcy. You can present a bankruptcy petition at the High Court in London, the Central London County Court or in a county court that deals with bankruptcy.
Generally, you should present the petition for bankruptcy to the court that deals with the area where the debtor has lived or traded for the majority of the time in the previous 6 months. If the debtor lives in one court district and runs a business in another, you should go to the court dealing with the district where the business is. If you are not sure which court you should go to, you should phone your nearest county court for advice.
If the debtor lives or trades in the London insolvency district you should present the petition to the High Court if they owe you £50,000 or more. If they owe you less than £50,000 you should present the petition to the Central London County Court.
Where do I present a bankruptcy petition if the debtor lives abroad?
If the debtor lives abroad you need to consider whether you can make them bankrupt in this country. You should take the following into consideration:
- If the debtor lives in a member state of the European Union (EU) - apart from Denmark - you will not be able to present a bankruptcy petition against that person if they carry on business or earn their living in that EU country. You have to make the person bankrupt under the law of the country where they now live.
- If the person is retired or unemployed, the court will look at the place where they normally live. You have to make the person bankrupt under the law of the country where they normally work or live.
- If the debtor lives in a country that is not in the EU, or if they live in Denmark, you will be able to present a bankruptcy petition only if they have lived or had a residence here, or carried on business here, at any time in the 3 years before the date you present the bankruptcy petition. The only exception is if they are in England and Wales on that day.
- If the debtor does not live in England or Wales and you are able to make them bankrupt here – see the point above, you can present the petition to the High Court. Alternatively, if the debtor lived or ran a business in England and Wales within the 6 months immediately before you present the petition, you can take it to a county court. If the debtor ran a business here during this time, you can present the petition in the county court for the insolvency district where the debtor carried on their business. If they did not run a business, you would present it in the county court for the insolvency district where they lived.
- If the debtor lived or carried on business in the London insolvency district for the majority of the 6 months immediately before presenting the petition, you must present it in the High Court. This would apply, even if the debtor owes you £50,000 or more.
The address and phone number of your local county court are listed under 'Courts' in the phone book. Look for: 'civil courts - county courts' and not magistrates' courts. You will need to contact the court to find out if it has jurisdiction (authority) to hear a bankruptcy case. The Courts and Tribunals Service website at http://www.justice.gov.uk/about/hmcts/courts.htm has a list of county courts with bankruptcy jurisdiction and an index that shows what geographical area they cover.
Further enquiries about “How to make someone bankrupt”
If you still have unanswered questions about how to make someone bankrupt, you can also contact The Insolvency Enquiry Line on 0845 602 9848 – between 8.00am and 5.00pm Monday – Friday except bank holidays; or email: Insolvency.EnquiryLine.gsi.gov.uk
