Bankruptcy in the small claims court

If the debt owed to you is for more than £5,000 you can apply to make the person who owes you the money bankrupt.

You must first demand the money by serving on your opponent a "Statutory Demand Form", (this can be obtained from legal stationers).

You must then wait 3 weeks and if your debt is not repaid and your opponent has not applied to the court to set aside the Statutory Demand, you can carry on.

You must send to the court a "Creditors Petition Form", which you can obtain from the court and pay a court fee.

You must show that your opponent has not paid the debt and there is no possibility that they will be able to pay the debt.

The court will fix a hearing date to decide whether to make your opponent bankrupt. If your opponent is made bankrupt then the court will appoint someone called a "Trustee in Bankruptcy" to look after your opponent's affairs.

The "Receiver" will be responsible for sharing out any money or property your opponent has between you and any other people your opponent owes money to.

However, the Receiver pays out in a special order.
Just because you have applied to make your opponent bankrupt, does not mean that you will be first in the queue to be paid. Once you have made your opponent bankrupt you cannot start any other legal proceedings against him.

This means that you cannot go on to try a different method of enforcement. Once a Trustee in Bankruptcy is appointed no court proceedings can be started against a bankrupt without the permission of the court.

When your opponent finds out that you are about to make him or her bankrupt they could try to avoid this by applying to the court for what is known as a "Voluntary Arrangement". This will prevent you starting or continuing with bankruptcy proceedings.

Instead your opponent will submit a report to the court with his proposals to pay his debts. A meeting will then take place, attended by anyone who your opponent owes money to. You and those other people are allowed to vote either to accept or reject your opponent's proposals.

If the majority of those at the meeting reject the proposals then you can carry on with your bankruptcy proceedings.

If the majority accept it then you may have to accept your opponent's proposals even if this does not guarantee you full payment of your debt.

Setting Aside Judgment

Small Claims Court