An alternative to issuing a County Court claim is to commence insolvency action. This is a possibility where:

  • If the debtor is a company the debt value is above £750
  • If the debtor is an individual the debt value is above £5,000
  • The debtor is located in England or Wales
  • There is no known dispute over the unpaid debt.

The first step in insolvency proceedings is to serve the debtor with a statutory demand for payment. This gives the debtor 21 days to make payment and also warns the debtor that failure to make payment will mean you will issue a winding-up (company) or bankruptcy (individual) petition.


  • The threat of Bankruptcy or Winding-Up proceedings can be a powerful incentive for a debtor to pay given the serious nature of insolvency proceedings
  • Preparing a statutory demand is included in our No Recovery No Fee service - you are only required to pay the disbursements for instructing a process server in advance
  • Can either result in prompt payment of a debt or be useful to highlight any disputes over the debt


  • It is seen as an aggressive step and may have a negative impact on ongoing business relationships
  • It may not result in payment and the next steps would be issuing a County Court Claim or proceedings with the threat and presenting a Bankruptcy or Winding-Up Petition. This can be costly
  • If a debtor can raise an arguable defence to the obligation to pay, then the demand may be set aside and you would have to proceed by way of County Court proceedings

This step should particularly be considered if the debtor is a company and you know that they are in a position to pay their debts.

For more information or to instruct us today, contact Forbes Collect on 0800 689 4176 or email us on

12 Dec 2017

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