To recover money you're owed by a person or business, you can:
- use a mediation service
- make a court claim for your money
- send a formal request for the debt to be paid (a ‘statutory demand’)
You can also consider making someone bankrupt if they cannot pay. The person or business who owes you money is known as your ‘debtor’.
Use a mediation service
Mediation is an option if:
- someone owes you money
- they have not arranged to repay it after you've spoken or written to them
A mediation service could be quicker and cheaper than making someone bankrupt.
During mediation, an impartial person will help you find a solution with your debtor.
There can be a fee for mediation, but it's cheaper than hiring a solicitor and taking court action. The fee depends on how much is owed.
If mediation does not work, you can make a court claim for your money.
But this is not the only option open to you. Explore alternatives to going to court.
Take court action
You can use other legal processes, known as diligences, to recover debt.
You can get advice about diligence processes from a solicitor. You can also:
You can apply to the court to wind up a company if it cannot pay its debts.
Send a statutory demand
A statutory demand is a formal request for someone to pay you a debt. If you send a statutory demand to a person or company, they have 21 days to do one of the following:
- settle the debt
- reach an agreement to pay it
- formally deny the debt by recorded delivery
If the debtor does not do any of these within 21 days, they’ll become insolvent. This may put them in danger of bankruptcy (‘sequestration’).
You can request a statutory demand form from the Accountant in Bankruptcy Insolvency Registrations team. Your solicitor may also have a statutory demand template. They can help you to complete it with all the necessary information.
The demand must be served by a sheriff officer.
Challenging a statutory demand
If the debtor denies a debt, contact a solicitor before you take any action.
Ask a court to make someone bankrupt
You can ask the sheriff court to make someone bankrupt when all the following apply:
- they owe you at least £5,000
- you’ve sent them a statutory demand to repay it
- they’ve ignored the statutory demand or cannot pay you back
The costs may be high and you may not get any of your money back. You must pay the Accountant in Bankruptcy (AiB):
- a fee of £150 when you submit the petition
- a further £750 when the court awards the petition and the AiB is appointed trustee
If the appointed trustee is not the AiB, there is no further fee to be paid.
Bankruptcy has serious consequences for debtors. Be aware that you may not recover the money you're owed by making someone bankrupt.
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