Choosing your weapon
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Let’s consider bankruptcy or liquidation first. Insolvency cramps everyone’s style, and members of some professions are actually barred from practising if they are insolvent. The threat of bankruptcy (for an individual) or liquidation (for a company) may therefore concentrate your debtor’s mind wonderfully, and you can do the threatening free of charge with a statutory demand (see Chapter 14), but remember: ❍ bankruptcy proceedings are limited to debts of
£750 or more, and the same limit (with exceptions) applies to liquidation proceedings;
❍ bankruptcy/liquidation proceedings are not suitable where the court might find that the debtor has genuine grounds for disputing your claim;
❍ the threat – particularly the statutory demand – is often more potent than the deed itself.