27/05/2014

You won't be in business very long before running across that little gem of a debt-recovery method: the statutory demand.  Mind you, don't tell the judge that you've used it simply as a debt-recovery tool.  It's not supposed to be used for that but rather to prevent failing companies from continuing to wreak havoc on unsuspecting creditors.

For those that came in late, the statutory demand is a notice given to a company by a creditor that it owes the creditor a specific debt, and that if it fails to pay that debt within 21 days, it will be presumed to be insolvent under the law and the creditor can apply to have it wound up.  

It sounds simple but there are masses of technicalities that govern the law and practice around statutory demands and no creditor should issue one without either knowing those technicalities or using a law firm like ours that does.

There's lots of advice online about statutory demands from lawyers, document providers and government authorities.  They will tell you many things about how to use them except two of the most important – how much do they cost and will it be worth it?

If you've reached the stage where you have to issue one of these to a debtor then clearly you already have a problem.  So the question you'll have is, "If I spend more money on this, will I recover it or is it just throwing good money after bad?"

It may not be possible in any given circumstance to answer that question with absolute certainty.  What can be said with certainty is that you should do what you can to keep the costs of issuing the document as low as possible because you may not be able to recover those costs, let alone the debt itself.

That's where Townsends comes in.  We've developed a fixed-price online product allowing us to take the creditor's instructions efficiently, advise the creditor about what they need to know effectively, and produce a statutory demand quickly – all at a price that won't break the bank and may make the exercise worthwhile in testing the debtor's ultimate ability to pay.

Remember, unlike document providers with their 'just fill in the form but no guarantees' approach, the document we produce comes with our law firm's promise that it has been checked by a lawyer and complies with the current law.  We will also be able to help you understand more about the process and assess the viability of the approach.

For more information, go to our website www.townsendslaw.com.au or call us on (02) 8296 6222.