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Capquest Statutory Demand Letter

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Hi,

I received a letter from Capquest today informing me that they intend to serve an SD on me, on or around 13/07/09 if I don't contact them to pay up etc. etc.

Has anyone else had one of these letters and actually received the SD on the date they stated? Also was it served in person or just sent through the post?

I know how to deal with the SD as I've taken legal advice, but my only concern is that I'll be away on that date as my landlord is having some work done on my house, and I'm concerned that they make speak to him or one of his builders if they came to serve the papers.

Many thanks

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they post them out 2nd class mail that somehow takes 7 days to arrive! naughty

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No doubt back dated too.

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they post them out 2nd class mail that somehow takes 7 days to arrive! naughty

Out of interest what was the period of time between when they sent you the threat letter and when they sent you the actual SD?

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Can anyone help with this please or post a link to another thread?

Would also be interested to know if anyone has actually been taken to a bankruptcy hearing by Capquest or any other DCA too.

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they post them out 2nd class mail that somehow takes 7 days to arrive! naughty

 

i would advise not responding to this in any way

 

and if you receive a SD through the post (especially 2nd class) it will not be worth the paper it is written on so ignore it yet again

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happy bedtime reading............

 

THE STATUTORY DEMAND AND SERVICE BY POST

 

Introduction

The code relating to Statutory Demands (SDs) comprises [1] The Insolvency Act 1986 (IA) and The Insolvency Rules 1986 (IR).

 

A creditor may petition the court for a bankruptcy order against a debtor where he demonstrates the debtor is unable to pay his debts. One such way of demonstrating inability to pay is set out in section 268 of the IA.

 

Section 268 says:

268. Definition of “inability to pay”, etc.; the statutory demand.

(1) For the purposes of section 267(2)©, the debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either

(a) the petitioning creditor to whom the debt is owed has served on the debtor a demand (known as “the statutory demand”) in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least 3 weeks have elapsed since the demand was served and the demand has been neither complied with nor*set aside*in accordance with the rules, or

(b) execution or other process issued in respect of the debt on a judgment or order of any court in favour of the petitioning creditor, or one or more of the petitioning creditors to whom the debt is owed, has been returned unsatisfied in whole or in part.

 

In all cases, the debt due must be a debt which is for a sum equal to or exceeding the bankruptcy level. Currently that level is £750.00.

 

There are three types of SDs for service on individuals. They are:

[1] SD for debt payable immediately but not under a judgment of the court

[2] SD for debt payable immediately under a judgment of the court

[3] SD for debt payable in the future

 

This article is concerned with the postal service of type [1] SDs and considerations regarding applications to have .them*set aside.

 

Practice and Procedure: Rules for the Service of Statutory Demands

Here's a very important rule. It’s IR 6.3(2). It applies to the service of all SDs but is commonly disregarded by*debt collectors*who use the insolvency regime as a means of collecting debts with no genuine intention of proceeding to bankruptcy.

 

Rule 6.3 Requirements as to service

(2) The creditor is, by virtue of the Rules, under an obligation to do all that is reasonable for the purpose of bringing the statutory demand to the debtor's attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.

 

In short, the creditor is bound by obligation imposed by the rule, to do all that is reasonably practicable to cause personal service of the SD. To avoid the obligation the creditor is bound to demonstrate that it proved impractical to effect personal service. To achieve avoidance of the obligation he will be expected to attempt personal service, fail in that attempt and proceed to serve by some other way which he believes will cause the SD to come to the debtor's attention.

 

A debtor will invariably know the creditor wishes to attempt personal service because the creditor will tell him. Where a creditor has attempted but failed, the proper course is for the creditor to seek to make an appointment to meet the debtor. This is usually done by attending to serve personally, failing and pushing a letter through the letter box referring to the visit and leaving contact details by which the appointment may be fixed between the debtor and the person attempting to serve the SD.

 

The creditor has four months within which to serve the SD. Service after this time will require the creditor to explain himself and account for any dilatory conduct. If the method for service described above does not lead to personal service, then (and only then) service may be made by other means such as first class post or insertion through a letter box (Practice Direction, 18 December 1986, [1987] 1 All ER 604). For this to be acceptable to the court, the creditor must have taken similar steps to those which would persuade the court to grant an order for substituted service of a petition [see:*Re A Debtor (Nos 234 & 236 of 1991) The Independent 29 June 1992] (in which it was confirmed by Blackett Ord QC that in some cases it may be appropriate to serve the statutory demand upon the Solicitors of the debtor).

 

Sometimes SDs may come through the post to be signed for. The debtor's signature on the receipt retained by the postman may be sufficient evidence of an acknowledgement of receipt whereby postal service in this way proved a reasonably practical way of effecting service. The risk from the creditor's point of view is that the acknowledgement may be signed by someone other than the debtor.

 

Absent an order for substituted service, if the SD comes by ordinary post, service can not be said to have corresponded with the obligation imposed by IR 6.3.

Where purported service is effected in this way, the debtor should avoid writing to the creditor in a way which demonstrates receipt of the SD. He may if he cares, send a request for production of the agreement upon which the debt is based and/or a statement of account, but he would be very ill-advised to acknowledge receipt of a SD delivered in the ordinary course of post.

 

The reasoning against acknowledging receipt of a SD delivered in a way which would, apart from the debtor's acknowledgement of it, be incapable of demonstrating compliance with the IR 6.3(2) obligation is found in IR 6.11 which concerns the evidence the creditor must file at court proving service of the SD as a condition of his being allowed to present his petition.

 

Rule 6.11.Proof of service of statutory demand

(1) Where under section 268 the petition must have been preceded by a statutory demand, there must be filed in court, with the petition, an affidavit or affidavits proving service of the demand.

(2) Every affidavit must have exhibited to it a copy of the demand as served.

(3) Subject to the next paragraph, if the demand has been served personally on the debtor, the affidavit must be made by the person who effected that service.

(4) If service of the demand (however effected) has been acknowledged in writing either by the debtor himself, or by some person stating himself in the acknowledgement to be authorised to accept service on the debtor's behalf, the affidavit must be made either by the creditor or by a person acting on his behalf, and the acknowledgement of service must be exhibited to the affidavit.

(5) If neither paragraph (3) nor paragraph (4) applies, the affidavit or affidavits must be made by a person or persons having direct personal knowledge of the means adopted for serving the statutory demand, and must

(a) give particulars of the steps which have been taken with a view to serving the demand

personally, and

(b) state the means whereby (those steps having been ineffective) it was sought to bring

the demand to the debtor's attention, and

© specify a date by which, to the best of the knowledge, information and belief of the

person making the affidavit, the demand will have come to the debtor's attention.

(6) The steps of which particulars are given for the purposes of paragraph (5)(a) must be such as would have sufficed to justify an order for substituted service of a petition.

(7) If the affidavit specifies a date for the purposes of compliance with paragraph (5)©, then unless the court otherwise orders, that date is deemed for the purposes of the Rules to have been the date on which the statutory demand was served on the debtor.

(*Where the creditor has taken advantage of Rule 6.3(3) (newspaper advertisement), the affidavit must be made either by the creditor himself or by a person having direct personal knowledge of the circumstances; and there must be specified in the affidavit

(a) the means of the creditor's knowledge or (as the case may be) belief required for the

purposes of that Rule, and

(b) the date or dates on which, and the newspaper in which, the statutory demand was

advertised under that Rule;

and there shall be exhibited to the affidavit a copy of any advertisement of the statutory demand.

(9) The court may decline to file the petition if not satisfied that the creditor has discharged the obligation imposed on him by Rule 6.3(2)

 

Thus a creditor wishing to proceed with a petition based upon a SD served in the ordinary course of post, will, without the debtor's written acknowledgement of its receipt, be incapable of satisfying the requirements of proof demanded by IR 6.11. By IR 6.11(9), the petition runs a serious risk of rejection at the filing stage.

In order to illustrate the extent of the obligation imposed, in Regional Collection Services Ltd v Heald [2000] BPIR 661 it was held that a creditor had not done all that was reasonable within IR 6.3(2) where despite having made several failed attempts to serve the debtor at his home, he had failed to visit the debtor’s business premises.*

 

What does this all mean?

The service rules are not something new to*debt collectors. They know this rule well. The reality of the situation where a*debt collector*sends out a SD in the post is that he has absolutely no intention of petitioning the court for bankruptcy. He has no intention because [1] to present a petition involves his putting up serious money up front and into court (currently, September 2008 - court fee on presentation: £190.00, deposit: £415.00, plus fees to process server and solicitor on the hearing of the petition, perhaps another £750.00ish), and [2] if the petition succeeds, the debt collector ceases to have any further control over the collection of the debt.*

 

On the contrary, the debt collector wishes to retain control of the debt's recovery as cheaply as possible. His modus operandi is therefore to send out the scariest looking piece of paper imaginable in an envelope stuck to which is a second class stamp. If the debt collector genuinely intended to pursue the debtor by bankruptcy, was committed to paying the fees and losing control once a bankruptcy order had been made, he'd ensure he complied with the service rules from the outset and would not take any short cuts which would frustrate that genuine intention.*

 

It is an abuse of the process of the court and harassment to send out a statutory demand by post with no intention of relying on it in bankruptcy proceedings. This sort of practice once cost a creditor its Consumer Credit licence (Credit Default Register Limited, licence number 0154753 terminated 5 May 1993).*

 

Besides complying with the service rules he is required in his SD to

[1] properly particularise the debt by giving details of when the debt was incurred, how it arose, the consideration for the debt and where*interest*is claimed, the calculation for*interest;

[2] state the name of someone at the creditor's office and that person's contact details to whom enquiries should be addressed;

[3] state the court and court office address at which any application to*set aside*the SD should be delivered, and

[4] provide particulars of any assignment and the identity of all assignees.

Check for compliance with [1] to [4] above too. Any deficiencies are further clues as to the seriousness of the debt collector’s intentions.

 

What to do when a SD arrives on your doormat

[1] Keep the SD and the envelope it came in safe

[2] See what the SD says about a person to contact or a court to present an application to set aside the SD. If either one of these is incomplete, that is a further indication the SD is not serious

[3] Check the particulars of the debt and the identity of the creditor. What does it say? Is there a proper statement of facts showing how and why the debt is payable? Does it give dates and any of the other required details?

[4] Ask yourself, do I owe this debt and if the creditor sued me for it, would I have any arguable legal defence to it? To be able to answer this question you will need to know what the court regards as grounds to set aside the SD.

 

What would be grounds to set aside the SD?

 

Grounds to Set Aside a SD

An application to set aside must be made within 18 days of the receipt of the SD. That isn’t very long.

 

IR 6.5(4) says:

The court may grant the application (to set aside the SD) if

(a) the debtor appears to have a counterclaim, set-off or cross demand which equals or

exceeds the amount of the debt or debts specified in the statutory demand; or

(b) the debt is disputed on grounds which appear to the court to be substantial; or

© it appears that the creditor holds some security in respect of the debt claimed by the

demand, and either Rule 6.1(5) is not complied with in respect of it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or

(d) the court is satisfied, on other grounds, that the demand ought to be set aside.

 

This article would run for ever if every conceivable type of defence situation was discussed exhaustively. I think it fair to presume that if the debtor believed the creditor owed him money that belief existed before the SD arrived, not immediately following. I therefore propose to limit this part of this article to just a handful of those situations coming under IR 6.5(4)(b), concentrating on common consumer debt situations. Common examples would be:

 

1 Dispute Examples

[1] Amount of debt disputed in terms of quantum

The amount of the debt may be disputed in terms of the account and debit or credit payments applied to it, the inclusion of penalty charges,*interest*and so forth. May be you've paid the creditor more than he says you have. May be he's charged your account with money he ought not to have. If an argument of this kind is raised, it will be vital to demonstrate the issues reduce the amount of any admitted debt to below the bankruptcy level.

 

[Note: In a case where the SD was properly served (and therefore a little off topic for the purpose of this article) and where the extent of dispute is insufficient to reduce the admitted debt to below the bankruptcy level it would be advisable to pay the creditor sufficient to reduce the debt to beneath the bankruptcy level before the time allowed for the presentation of the petition since reduction to a sum below the level once the petition has been filed at court does not disable the court from making a bankruptcy order. See*Lilley v American Express (Europe) Ltd*[2000] BPIR 70.]

 

[2] Amount of debt disputed in terms of right to enforce.

In just about all regulated consumer credit agreements and debt, situations which will give rise to the possibility of a SD where there is default will involve the creditor or original creditor in having [a] served a default notice (DN), terminated the agreement and [c] demanded payment. The requirement to serve a valid DN, owing to section 87(1) of The Consumer Credit Act 1974 (CCA 74), is a pre-requisite of the power to terminate and claim payment. Check the DN to ensure it complies with the requirements of Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983. If the DN does not comply, the power to terminate and make demand for payment will also dis-apply.

A second situation would exist where during the currency of the agreement the creditor failed to comply with a request delivered to him pursuant to sections 77-79 of CCA 74. The Act restrains a creditor from enforcing the agreement for so long as he shall neglect to comply with the request (more on which below under ‘Gathering the evidence’)

 

[3] Amount of debt disputed as*statute barred.

A consumer debt ceases to be actionable once a continuous uninterrupted period of 6 years has elapsed since the date on which the debtor defaulted under the agreement and during that period of six years, the debtor neither made payment in reduction of the debt nor acknowledged it in writing. Further, once the period of six years has run out, the debt can not be revived.

 

The status of such debts where the period of six years as defined above has run out is that they are*statute barred. The statute is The Limitation Act 1980, the limitation is that cases must be brought before the six years have run out and the bar operates to prevent proceedings where the six years have run out.

 

2 Gathering the evidence

First a repeat of an earlier word of warning. In gathering evidence from the creditor or debt collector make sure nothing could be construed as an acknowledgment of receipt of the SD or of indebtedness.

 

Because the SD is simply a document in prescribed form delivered by the creditor, there is no involvement of the court or ‘court issue’. The Civil Procedure Rules (CPR) do not apply to the demand (with the exception of certain of the CPR cost rules). The rules which control the procedure are IR in which there is no provision corresponding to the CPR for disclosure of documents or Further Information.*

I have seen it suggested that a means of obtaining evidence is to make a request for a copy of the agreement and statement of account under CCA 74 section 77(1) or 78(1), claiming the added sting that if the request is not complied with the creditor’s power to continue with enforcement will be restrained.Invariably by the time the creditor is thinking about bankrupting the debtor the agreement will have long since terminated. Sections 77 and 78 have teeth only in so far as requests are made during the currency of the agreement.

 

That is not to say a request for the information would be inappropriate and in most cases it would be reasonable to make such a request although without dressing up the request as if it were made under section 77(1) or 78(1). Add to the request a request for the provision of any default notice relied upon or subsequent notice of termination and demand. The difficulty is whether the information will be forthcoming within the requisite 18 days. Any application for the information should avoid disclosing that the SD has been received in the post or give the appearance of an acknowledgment of indebtedness so as to set a new period of limitation running.

 

The reality is that if the debtor does not have any of the necessary information to hand and which shows a substantial dispute according to IR 6.5(4)(b) he will be chancing his arm by proceeding. If the debtor was served by post, given the proof of service difficulties, I would not recommend chancing it.*

 

Conclusion

This site is littered with examples of SDs being served by post and forum members then being encouraged to apply to the court to set the SD aside, often without any information about the creditor’s alleged debt. The member is encouraged to quote grounds for set aside as ‘debt in dispute’ but without any better information as to what that dispute might be about or how the application to set aid might be moulded to fit IR 6.5(4).

 

I’m in a minority for thinking that it is potentially dangerous for an individual to make a formal application to a court to set aside a SD in circumstances where he is incapable of demonstrating his application fits in with IR 6.5(4). An application which patently fails to meet the test is likely to be*dismissed*before it ever gets issued, just like the petition would under IR 6.11(9). This is because IR 6.5(1) says

 

On receipt of an application under Rule 6.4, the court may, if satisfied that no sufficient cause is shown for it, dismiss it without giving notice to the creditor. As from (inclusive) the date on which the application is dismissed, the time limited for compliance with the statutory demand runs again.

 

Nonetheless there are examples of application to set aside being made after postal service of a SD where no legally recognizable grounds for set aside are alluded to in the CAG thread. Notwithstanding, some of those applications get past IR 6.5(1) while others do not. There’s no hard and fast rule. IR 6.5(1) is permissive not mandatory. It says ‘the court may’.*

 

Even so, of those that make it through the net and have a date for hearing fixed, a number of those go on to ‘succeed’ as well. I say ‘succeed’ in inverted commas, because on being served with the notice of hearing, the debt collector commonly withdraws. He does this by writing a letter to the court offering some form of excuse, saying he no longer wishes to proceed down the insolvency route and saying he will issue a claim in the county court. He often adds a line asking that there be no order as to costs or some such similar whimper designed to avoid and consequential cost liability for his abuse of process.

 

In short therefore, the forum member who applied without legally recognised grounds to set aside the SD served by post and ‘succeeded’ in the way described above, will probably imagine with hindsight that the route he took was the right one. I am glad of his success. But I have to say that success was the product of luck and no judgment. The result was achieved by a combination of the court declining to dismiss under IR 6.5(1) and the debt collector’s decision not to pursue the SD, none of which was ever in the applicant’s control.*

 

Precisely the same result would have been achieved by the applicant doing nothing.*

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happy bedtime reading............

 

THE STATUTORY DEMAND AND SERVICE BY POST

 

Introduction

The code relating to Statutory Demands (SDs) comprises [1] The Insolvency Act 1986 (IA) and The Insolvency Rules 1986 (IR).

 

A creditor may petition the court for a bankruptcy order against a debtor where he demonstrates the debtor is unable to pay his debts. One such way of demonstrating inability to pay is set out in section 268 of the IA.

 

Section 268 says:

268. Definition of “inability to pay”, etc.; the statutory demand.

(1) For the purposes of section 267(2)©, the debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either

(a) the petitioning creditor to whom the debt is owed has served on the debtor a demand (known as “the statutory demand”) in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least 3 weeks have elapsed since the demand was served and the demand has been neither complied with nor*set aside*in accordance with the rules, or

(b) execution or other process issued in respect of the debt on a judgment or order of any court in favour of the petitioning creditor, or one or more of the petitioning creditors to whom the debt is owed, has been returned unsatisfied in whole or in part.

 

In all cases, the debt due must be a debt which is for a sum equal to or exceeding the bankruptcy level. Currently that level is £750.00.

 

There are three types of SDs for service on individuals. They are:

[1] SD for debt payable immediately but not under a judgment of the court

[2] SD for debt payable immediately under a judgment of the court

[3] SD for debt payable in the future

 

This article is concerned with the postal service of type [1] SDs and considerations regarding applications to have .them*set aside.

 

Practice and Procedure: Rules for the Service of Statutory Demands

Here's a very important rule. It’s IR 6.3(2). It applies to the service of all SDs but is commonly disregarded by*debt collectors*who use the insolvency regime as a means of collecting debts with no genuine intention of proceeding to bankruptcy.

 

Rule 6.3 Requirements as to service

(2) The creditor is, by virtue of the Rules, under an obligation to do all that is reasonable for the purpose of bringing the statutory demand to the debtor's attention and, if practicable in the particular circumstances, to cause personal service of the demand to be effected.

 

In short, the creditor is bound by obligation imposed by the rule, to do all that is reasonably practicable to cause personal service of the SD. To avoid the obligation the creditor is bound to demonstrate that it proved impractical to effect personal service. To achieve avoidance of the obligation he will be expected to attempt personal service, fail in that attempt and proceed to serve by some other way which he believes will cause the SD to come to the debtor's attention.

 

A debtor will invariably know the creditor wishes to attempt personal service because the creditor will tell him. Where a creditor has attempted but failed, the proper course is for the creditor to seek to make an appointment to meet the debtor. This is usually done by attending to serve personally, failing and pushing a letter through the letter box referring to the visit and leaving contact details by which the appointment may be fixed between the debtor and the person attempting to serve the SD.

 

The creditor has four months within which to serve the SD. Service after this time will require the creditor to explain himself and account for any dilatory conduct. If the method for service described above does not lead to personal service, then (and only then) service may be made by other means such as first class post or insertion through a letter box (Practice Direction, 18 December 1986, [1987] 1 All ER 604). For this to be acceptable to the court, the creditor must have taken similar steps to those which would persuade the court to grant an order for substituted service of a petition [see:*Re A Debtor (Nos 234 & 236 of 1991) The Independent 29 June 1992] (in which it was confirmed by Blackett Ord QC that in some cases it may be appropriate to serve the statutory demand upon the Solicitors of the debtor).

 

Sometimes SDs may come through the post to be signed for. The debtor's signature on the receipt retained by the postman may be sufficient evidence of an acknowledgement of receipt whereby postal service in this way proved a reasonably practical way of effecting service. The risk from the creditor's point of view is that the acknowledgement may be signed by someone other than the debtor.

 

Absent an order for substituted service, if the SD comes by ordinary post, service can not be said to have corresponded with the obligation imposed by IR 6.3.

Where purported service is effected in this way, the debtor should avoid writing to the creditor in a way which demonstrates receipt of the SD. He may if he cares, send a request for production of the agreement upon which the debt is based and/or a statement of account, but he would be very ill-advised to acknowledge receipt of a SD delivered in the ordinary course of post.

 

The reasoning against acknowledging receipt of a SD delivered in a way which would, apart from the debtor's acknowledgement of it, be incapable of demonstrating compliance with the IR 6.3(2) obligation is found in IR 6.11 which concerns the evidence the creditor must file at court proving service of the SD as a condition of his being allowed to present his petition.

 

Rule 6.11.Proof of service of statutory demand

(1) Where under section 268 the petition must have been preceded by a statutory demand, there must be filed in court, with the petition, an affidavit or affidavits proving service of the demand.

(2) Every affidavit must have exhibited to it a copy of the demand as served.

(3) Subject to the next paragraph, if the demand has been served personally on the debtor, the affidavit must be made by the person who effected that service.

(4) If service of the demand (however effected) has been acknowledged in writing either by the debtor himself, or by some person stating himself in the acknowledgement to be authorised to accept service on the debtor's behalf, the affidavit must be made either by the creditor or by a person acting on his behalf, and the acknowledgement of service must be exhibited to the affidavit.

(5) If neither paragraph (3) nor paragraph (4) applies, the affidavit or affidavits must be made by a person or persons having direct personal knowledge of the means adopted for serving the statutory demand, and must

(a) give particulars of the steps which have been taken with a view to serving the demand

personally, and

(b) state the means whereby (those steps having been ineffective) it was sought to bring

the demand to the debtor's attention, and

© specify a date by which, to the best of the knowledge, information and belief of the

person making the affidavit, the demand will have come to the debtor's attention.

(6) The steps of which particulars are given for the purposes of paragraph (5)(a) must be such as would have sufficed to justify an order for substituted service of a petition.

(7) If the affidavit specifies a date for the purposes of compliance with paragraph (5)©, then unless the court otherwise orders, that date is deemed for the purposes of the Rules to have been the date on which the statutory demand was served on the debtor.

(*Where the creditor has taken advantage of Rule 6.3(3) (newspaper advertisement), the affidavit must be made either by the creditor himself or by a person having direct personal knowledge of the circumstances; and there must be specified in the affidavit

(a) the means of the creditor's knowledge or (as the case may be) belief required for the

purposes of that Rule, and

(b) the date or dates on which, and the newspaper in which, the statutory demand was

advertised under that Rule;

and there shall be exhibited to the affidavit a copy of any advertisement of the statutory demand.

(9) The court may decline to file the petition if not satisfied that the creditor has discharged the obligation imposed on him by Rule 6.3(2)

 

Thus a creditor wishing to proceed with a petition based upon a SD served in the ordinary course of post, will, without the debtor's written acknowledgement of its receipt, be incapable of satisfying the requirements of proof demanded by IR 6.11. By IR 6.11(9), the petition runs a serious risk of rejection at the filing stage.

In order to illustrate the extent of the obligation imposed, in Regional Collection Services Ltd v Heald [2000] BPIR 661 it was held that a creditor had not done all that was reasonable within IR 6.3(2) where despite having made several failed attempts to serve the debtor at his home, he had failed to visit the debtor’s business premises.*

 

What does this all mean?

The service rules are not something new to*debt collectors. They know this rule well. The reality of the situation where a*debt collector*sends out a SD in the post is that he has absolutely no intention of petitioning the court for bankruptcy. He has no intention because [1] to present a petition involves his putting up serious money up front and into court (currently, September 2008 - court fee on presentation: £190.00, deposit: £415.00, plus fees to process server and solicitor on the hearing of the petition, perhaps another £750.00ish), and [2] if the petition succeeds, the debt collector ceases to have any further control over the collection of the debt.*

 

On the contrary, the debt collector wishes to retain control of the debt's recovery as cheaply as possible. His modus operandi is therefore to send out the scariest looking piece of paper imaginable in an envelope stuck to which is a second class stamp. If the debt collector genuinely intended to pursue the debtor by bankruptcy, was committed to paying the fees and losing control once a bankruptcy order had been made, he'd ensure he complied with the service rules from the outset and would not take any short cuts which would frustrate that genuine intention.*

 

It is an abuse of the process of the court and harassment to send out a statutory demand by post with no intention of relying on it in bankruptcy proceedings. This sort of practice once cost a creditor its Consumer Credit licence (Credit Default Register Limited, licence number 0154753 terminated 5 May 1993).*

 

Besides complying with the service rules he is required in his SD to

[1] properly particularise the debt by giving details of when the debt was incurred, how it arose, the consideration for the debt and where*interest*is claimed, the calculation for*interest;

[2] state the name of someone at the creditor's office and that person's contact details to whom enquiries should be addressed;

[3] state the court and court office address at which any application to*set aside*the SD should be delivered, and

[4] provide particulars of any assignment and the identity of all assignees.

Check for compliance with [1] to [4] above too. Any deficiencies are further clues as to the seriousness of the debt collector’s intentions.

 

What to do when a SD arrives on your doormat

[1] Keep the SD and the envelope it came in safe

[2] See what the SD says about a person to contact or a court to present an application to set aside the SD. If either one of these is incomplete, that is a further indication the SD is not serious

[3] Check the particulars of the debt and the identity of the creditor. What does it say? Is there a proper statement of facts showing how and why the debt is payable? Does it give dates and any of the other required details?

[4] Ask yourself, do I owe this debt and if the creditor sued me for it, would I have any arguable legal defence to it? To be able to answer this question you will need to know what the court regards as grounds to set aside the SD.

 

What would be grounds to set aside the SD?

 

Grounds to Set Aside a SD

An application to set aside must be made within 18 days of the receipt of the SD. That isn’t very long.

 

IR 6.5(4) says:

The court may grant the application (to set aside the SD) if

(a) the debtor appears to have a counterclaim, set-off or cross demand which equals or

exceeds the amount of the debt or debts specified in the statutory demand; or

(b) the debt is disputed on grounds which appear to the court to be substantial; or

© it appears that the creditor holds some security in respect of the debt claimed by the

demand, and either Rule 6.1(5) is not complied with in respect of it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or

(d) the court is satisfied, on other grounds, that the demand ought to be set aside.

 

This article would run for ever if every conceivable type of defence situation was discussed exhaustively. I think it fair to presume that if the debtor believed the creditor owed him money that belief existed before the SD arrived, not immediately following. I therefore propose to limit this part of this article to just a handful of those situations coming under IR 6.5(4)(b), concentrating on common consumer debt situations. Common examples would be:

 

1 Dispute Examples

[1] Amount of debt disputed in terms of quantum

The amount of the debt may be disputed in terms of the account and debit or credit payments applied to it, the inclusion of penalty charges,*interest*and so forth. May be you've paid the creditor more than he says you have. May be he's charged your account with money he ought not to have. If an argument of this kind is raised, it will be vital to demonstrate the issues reduce the amount of any admitted debt to below the bankruptcy level.

 

[Note: In a case where the SD was properly served (and therefore a little off topic for the purpose of this article) and where the extent of dispute is insufficient to reduce the admitted debt to below the bankruptcy level it would be advisable to pay the creditor sufficient to reduce the debt to beneath the bankruptcy level before the time allowed for the presentation of the petition since reduction to a sum below the level once the petition has been filed at court does not disable the court from making a bankruptcy order. See*Lilley v American Express (Europe) Ltd*[2000] BPIR 70.]

 

[2] Amount of debt disputed in terms of right to enforce.

In just about all regulated consumer credit agreements and debt, situations which will give rise to the possibility of a SD where there is default will involve the creditor or original creditor in having [a] served a default notice (DN), terminated the agreement and [c] demanded payment. The requirement to serve a valid DN, owing to section 87(1) of The Consumer Credit Act 1974 (CCA 74), is a pre-requisite of the power to terminate and claim payment. Check the DN to ensure it complies with the requirements of Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983. If the DN does not comply, the power to terminate and make demand for payment will also dis-apply.

A second situation would exist where during the currency of the agreement the creditor failed to comply with a request delivered to him pursuant to sections 77-79 of CCA 74. The Act restrains a creditor from enforcing the agreement for so long as he shall neglect to comply with the request (more on which below under ‘Gathering the evidence’)

 

[3] Amount of debt disputed as*statute barred.

A consumer debt ceases to be actionable once a continuous uninterrupted period of 6 years has elapsed since the date on which the debtor defaulted under the agreement and during that period of six years, the debtor neither made payment in reduction of the debt nor acknowledged it in writing. Further, once the period of six years has run out, the debt can not be revived.

 

The status of such debts where the period of six years as defined above has run out is that they are*statute barred. The statute is The Limitation Act 1980, the limitation is that cases must be brought before the six years have run out and the bar operates to prevent proceedings where the six years have run out.

 

2 Gathering the evidence

First a repeat of an earlier word of warning. In gathering evidence from the creditor or debt collector make sure nothing could be construed as an acknowledgment of receipt of the SD or of indebtedness.

 

Because the SD is simply a document in prescribed form delivered by the creditor, there is no involvement of the court or ‘court issue’. The Civil Procedure Rules (CPR) do not apply to the demand (with the exception of certain of the CPR cost rules). The rules which control the procedure are IR in which there is no provision corresponding to the CPR for disclosure of documents or Further Information.*

I have seen it suggested that a means of obtaining evidence is to make a request for a copy of the agreement and statement of account under CCA 74 section 77(1) or 78(1), claiming the added sting that if the request is not complied with the creditor’s power to continue with enforcement will be restrained.Invariably by the time the creditor is thinking about bankrupting the debtor the agreement will have long since terminated. Sections 77 and 78 have teeth only in so far as requests are made during the currency of the agreement.

 

That is not to say a request for the information would be inappropriate and in most cases it would be reasonable to make such a request although without dressing up the request as if it were made under section 77(1) or 78(1). Add to the request a request for the provision of any default notice relied upon or subsequent notice of termination and demand. The difficulty is whether the information will be forthcoming within the requisite 18 days. Any application for the information should avoid disclosing that the SD has been received in the post or give the appearance of an acknowledgment of indebtedness so as to set a new period of limitation running.

 

The reality is that if the debtor does not have any of the necessary information to hand and which shows a substantial dispute according to IR 6.5(4)(b) he will be chancing his arm by proceeding. If the debtor was served by post, given the proof of service difficulties, I would not recommend chancing it.*

 

Conclusion

This site is littered with examples of SDs being served by post and forum members then being encouraged to apply to the court to set the SD aside, often without any information about the creditor’s alleged debt. The member is encouraged to quote grounds for set aside as ‘debt in dispute’ but without any better information as to what that dispute might be about or how the application to set aid might be moulded to fit IR 6.5(4).

 

I’m in a minority for thinking that it is potentially dangerous for an individual to make a formal application to a court to set aside a SD in circumstances where he is incapable of demonstrating his application fits in with IR 6.5(4). An application which patently fails to meet the test is likely to be*dismissed*before it ever gets issued, just like the petition would under IR 6.11(9). This is because IR 6.5(1) says

 

On receipt of an application under Rule 6.4, the court may, if satisfied that no sufficient cause is shown for it, dismiss it without giving notice to the creditor. As from (inclusive) the date on which the application is dismissed, the time limited for compliance with the statutory demand runs again.

 

Nonetheless there are examples of application to set aside being made after postal service of a SD where no legally recognizable grounds for set aside are alluded to in the CAG thread. Notwithstanding, some of those applications get past IR 6.5(1) while others do not. There’s no hard and fast rule. IR 6.5(1) is permissive not mandatory. It says ‘the court may’.*

 

Even so, of those that make it through the net and have a date for hearing fixed, a number of those go on to ‘succeed’ as well. I say ‘succeed’ in inverted commas, because on being served with the notice of hearing, the debt collector commonly withdraws. He does this by writing a letter to the court offering some form of excuse, saying he no longer wishes to proceed down the insolvency route and saying he will issue a claim in the county court. He often adds a line asking that there be no order as to costs or some such similar whimper designed to avoid and consequential cost liability for his abuse of process.

 

In short therefore, the forum member who applied without legally recognised grounds to set aside the SD served by post and ‘succeeded’ in the way described above, will probably imagine with hindsight that the route he took was the right one. I am glad of his success. But I have to say that success was the product of luck and no judgment. The result was achieved by a combination of the court declining to dismiss under IR 6.5(1) and the debt collector’s decision not to pursue the SD, none of which was ever in the applicant’s control.*

 

Precisely the same result would have been achieved by the applicant doing nothing.*

Thanks for this. It appears to be saying to do nothing if you get an SD by post?

I don't have property or any assests and am not working. Has anybody in similar circumstances ignored the SD and still been taken to a bankruptcy hearing by Capquest or any other DCA?

Also I know Capquest are only acting on behalf of their client, so do they have the authority to take legal action against me?

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Thanks for this. It appears to be saying to do nothing if you get an SD by post?

I don't have property or any assests and am not working. Has anybody in similar circumstances ignored the SD and still been taken to a bankruptcy hearing by Capquest or any other DCA?

Also I know Capquest are only acting on behalf of their client, so do they have the authority to take legal action against me?

 

Hi, firstly I would NOT advise that you ignore any SD that you receive!!

 

If I were in your position, I would almost certainly be ignoring the letter that you currently have.... but if I received a Stat Demand then I would immediately begin the process of having it Set Aside!

 

As slim as the risk of capquest actually taking you to bankruptcy is, I personally would not think it is a risk worth taking and I think that anyone would be incredibly irresponsible to advise you to ignore a Statutory Demand....... unless you are in a position where you would actually rather be made Bankrupt, in which case sit and hope ;)

 

Are CrapQuest likely to take it to Bankruptcy? Probably not!

Is this a risk worth taking? Well that's a personal decision..... I persoanlly don't think so.

 

Cheers

UF


I am rarely around these parts any more. I only stop by when something has come to my attention that has sufficiently annoyed me so as to persuade me to awake from my nap and put in my two pence.

 

I am a final year law student; I am NOT an expert in law. All of my posts are just my opinion. I cannot be held responsible for any outcome whatsoever resulting from any person following the opinions or information contained within my posts. Always seek professional legal advice from a qualified lawyer.

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Have a read through the threads in here - DCA Legal Successes - The Consumer Forums , 1st Credit take people through to bankrupty stage and have recently had restrictions placed on them....if the debt is a credit card/loan debt then i'd send off for a copy of your agreement for good measure.

 

This is the 1st Credit information - The Office of Fair Trading: OFT imposes requirements on 1st Credit over debt collection practices

 

Let us know if you do get a statutory demand...also how old is the alleged debt ?


PLEASE NOTE - I am not a legal expert, what is stated is my own opinion and from what I have learnt from this forum and my own experiences.

 

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How much do you owe

 

They can only pursue bankruptcy on debts over £600. If you owe less than this they can't make you bankrupt.


Andy...

 

 

 

 

 

 

 

 

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Hello Bonzo697, I've had a similar letter to yours with the SD date being next week. Although I have been making regular payments on or before the agreed date, they have writted back saying that no agreement was discussed nor made. Rubbish, if no agreement was made they would have been on my back a lot earlier than now. I have been paying since 2006! This is a very good example of why one must never telephone any DCA and make an oral agreement.

I believe that DCA's are feeling the credit crunch and are sending out both threatening and intimidating letters out of frustration. After all, the owners and staff are really quite thick.

I have sent them a CCA request but, guess what, no reply as yet.


[sIGPIC][/sIGPIC]

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How much do you owe

 

They can only pursue bankruptcy on debts over £600. If you owe less than this they can't make you bankrupt.

 

750

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Thanks for this. It appears to be saying to do nothing if you get an SD by post?

I don't have property or any assests and am not working. Has anybody in similar circumstances ignored the SD and still been taken to a bankruptcy hearing by Capquest or any other DCA?

Also I know Capquest are only acting on behalf of their client, so do they have the authority to take legal action against me?

 

your welcome- before you dismiss it out of hand as advised by other posters please bear in mind it was not written by me but by someone who i beleive is greatly experienced in these matters

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Thanks again for all your replies and advice. The amount is for more than £750 but I have no property or anything of any value if they ever actually attempted to make me bankrupt. The debt charity have advised me to send an internal complaint letter and also request a further copy of the CCA (even though a CCA to a previous DCA and SAR to the OC only provided an application form) and then to wait and see what they do. If they do issue the SD then I assume I would have grounds for setting aside as the account is in dispute.

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Have a read through the threads in here - DCA Legal Successes - The Consumer Forums , 1st Credit take people through to bankrupty stage and have recently had restrictions placed on them....if the debt is a credit card/loan debt then i'd send off for a copy of your agreement for good measure.

 

This is the 1st Credit information - The Office of Fair Trading: OFT imposes requirements on 1st Credit over debt collection practices

 

Let us know if you do get a statutory demand...also how old is the alleged debt ?

Thanks for the info. The alleged debt is from late 90s.

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it can also pay to let them know that you have no assets

 

at the end of the day this is a commercial decision which will- if they proceed easily cost them upwards of 1600 quid and they are not going to throw good money after bad even if they have a solid claim.

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Thanks for the info. The alleged debt is from late 90s.

 

blimey that came out of left field

 

are you saying that you have not paid anything against the debt or acknowledged it in writing for more than 6 years??

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blimey that came out of left field

 

are you saying that you have not paid anything against the debt or acknowledged it in writing for more than 6 years??

Sorry no. I was originally paying a nominal amount to a previous DCA, initially via a debt managament company who advised me that's what I should do. Obviously this was in their interest but I was naive. A couple of years ago I got fed up with them not sending my payments and with having to pay them to do so.

Subsequently I stopped using them and sent CCA requests to all of my alleged creditors. The original DCA returned the account late last year after my CCA/SAR requests and nothing happened until recently when Capquest appeared.

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pity but not to worry i think you are on good ground whichever way it goes

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Bonzo, I had one of these from Cr@pquest a couple of weeks ago & this was my response.

 

Dear Sirs

With reference to your correspondence dated XX June 2009 I presume it is a standard threat letter as any proper investigation into my current financial position would see that I would welcome a Statutory Demand with open arms.

 

As someone who does not own a home or car & is living on benefits who has debts to other creditors much larger than your claim I would be interested to see what percentage of nothing my Bankruptcy would furnish you with. Indeed as I cannot afford to go bankrupt myself your offer is most welcome though I doubt you would do me the favour.

 

In the meantime enclosed is a cheque for £5.00 which is my new offer each month. I advise that I am still looking into the enforceability of the CCA you sent me & also other paperwork supplied by Halifax from a Subject Access Request.

 

Yours sincerely

 

 

 

 

 

I've just updated my thread with their response

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/204949-capquest-halifax-sd-threat.html

 

 

Morph

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Bonzo, I had one of these from Cr@pquest a couple of weeks ago & this was my response.

 

Dear Sirs

With reference to your correspondence dated XX June 2009 I presume it is a standard threat letter as any proper investigation into my current financial position would see that I would welcome a Statutory Demand with open arms.

 

As someone who does not own a home or car & is living on benefits who has debts to other creditors much larger than your claim I would be interested to see what percentage of nothing my Bankruptcy would furnish you with. Indeed as I cannot afford to go bankrupt myself your offer is most welcome though I doubt you would do me the favour.

 

In the meantime enclosed is a cheque for £5.00 which is my new offer each month. I advise that I am still looking into the enforceability of the CCA you sent me & also other paperwork supplied by Halifax from a Subject Access Request.

 

Yours sincerely

 

 

 

 

 

I've just updated my thread with their response

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/204949-capquest-halifax-sd-threat.html

 

 

Morph

Thanks for this. I've just draughted a letter along the same lines. If they're aware that the creditor doesn't have the ability to pay as a result of bankruptcy I assume it could be considered as an abuse of process.

Out of interest what was their reply to your letter?

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Bonzo, I had one of these from Cr@pquest a couple of weeks ago & this was my response.

 

Dear Sirs

With reference to your correspondence dated XX June 2009 I presume it is a standard threat letter as any proper investigation into my current financial position would see that I would welcome a Statutory Demand with open arms.

 

As someone who does not own a home or car & is living on benefits who has debts to other creditors much larger than your claim I would be interested to see what percentage of nothing my Bankruptcy would furnish you with. Indeed as I cannot afford to go bankrupt myself your offer is most welcome though I doubt you would do me the favour.

 

In the meantime enclosed is a cheque for £5.00 which is my new offer each month. I advise that I am still looking into the enforceability of the CCA you sent me & also other paperwork supplied by Halifax from a Subject Access Request.

 

Yours sincerely

 

 

 

 

 

I've just updated my thread with their response

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/204949-capquest-halifax-sd-threat.html

 

 

Morph

 

nice one morph- don't you just love it when your'e in control!!

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I've now sent them a CCA a FOS internal complaint letter and notification of my financial circumstances, no doubt they'll ignore them all but if they do issue the SD I assume i've got grounds to have it set aside and also for complaint as abuse of process.

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I've now sent them a CCA a FOS internal complaint letter and notification of my financial circumstances, no doubt they'll ignore them all but if they do issue the SD I assume i've got grounds to have it set aside and also for complaint as abuse of process.

Had a reply informing me they were removing the account from their system!

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