Things to Know about Creditor’s Statutory Demand
Clients often withhold the due payment of businesses for a long time. This has a huge impact on the stability of businesses, to the extent of making them bankrupt. However, this is unprofessional and unethical. With legal help, businesses can therefore send Statutory Demand to debtors, both individuals, and organizations who owe you money. Read more to find out the steps.
What is it and when can you do it?
Statutory Demand is a legal notice where the debtor is warned to clear the debt. Once sent, your client will have to pay you the due amount within the next 21 days. Failing which, the creditor firm might start legal proceedings against them. It may lead to bankruptcy of the debtor company or altogether close their business. At Nelson Cooper & Ortiz, LLC, we provide complete guidance about the procedure to our existing and new clients.
To send Statutory Demand, the debt has to be indisputable. The debtor must be a Pty Ltd company and the debt amount should be more than $2000.
What is the next step? Does it work?
The debtor company can either pay the entire sum that they owe you or instantly apply to set it aside. According to a commercial collection agency, if the debtor company wishes to set it aside, that will cost them more. Therefore, they would be forced to pay. In most cases, debtors pay the amount or propose a payment schedule. Statutory Demand is sent from a lawyer representing the creditor. It is enforced by Corporations Act. It sends a clear message that the creditor is willing to take the issue to the court if the debt is not paid soon.
What can be done next?
After 21 days, if your debt is still unpaid, you can file a lawsuit against them in Supreme Court. The creditor might ask to liquidate the debtor company or wait for the next two months to do the same. The expense of Statutory Demand is approximately $400.
Why do creditors prefer Statutory Demand?
Often creditors are left with no other option than to take the matter to court. Stubborn or non-paying clients highly affect business and that is unacceptable. When other strategies fail, this is the last business debt collection technique that you can rely on. If used properly, it reflects better results than usual lawsuits.
With proper knowledge and help, you can save your company from non-payers through Statutory Demand. So, what are you waiting for? Google with ‘collection agencies near me’ and find us. Good luck!