A letter of demand gives warning you are about to issue proceedings against debtor. A letter of demand encourages a debtor to pay within the prescribed period. Failing to issue a letter of demand may well impact on recovery of expenses.
Where the debtor is not an individual, a shortened demand can be issued to establish apparent insolvency (inabilty to pay sums as they fall due) for commencing insolvency proceedings.
Before a creditor can apply to petition for bankruptcy (England), sequestration (Scotland) or the appointment of a liquidator they must serve a statutory demand on the debtor in a prescribed form.
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