Bankruptcy proceedings - served or not?

The purpose of service of any legal proceedings is to formally bring notice of the proceedings to the opposing party.

The limit for personal bankruptcy increased from £750 to £5,000 on 1st October 2015. This represents a big increase and a blow to those to whom money is owed. The possibility of serving a statutory demand for an undisputed debt followed by the issue of a bankruptcy petition if the debt remained unpaid represented an important tool in the creditor's armoury.

Following the increase of the limit to £5,000, it is now necessary for creditors who are owed £5,000 or less to issue County Court proceedings for the debt, which is a slower and more expensive process.

However a key element of the court process is to ensure that the proceedings are properly served upon the person against whom the order is being made.

The purpose of service of any legal proceedings is to formally bring notice of the proceedings to the opposing party.

In a recent case, the court had to consider whether the proceedings had been properly served in a situation where the bankrupt never came into contact with the documents.

The person whose job it is to serve notice of court proceedings on people is a 'process server' and in the case, the bankrupt invited a friend to the meeting with the process server. The bankrupt stated that the process server handed the petition to his friend who read it, attempted to return it to the process server and then threw the document into the bin.

The bankrupt tried to have the bankruptcy overturned on the basis that the proceedings had not been properly served upon him.

The court agreed with the established case law and held that despite the fact that the bankrupt has not taken possession of the document, he had been told what the document contained and it had been left near him - so it was deemed to be properly served.

The case is an important reminder of the fact that any proceedings can be set aside if they have not been properly served.  If there is any doubt as to service, they should be re-served or a court order should be obtained for substituted service.

These are technical areas upon which the success or failure of a claim can turn and given the expense of court proceedings, you would be well advised to obtain specialist legal advice to increase your chances of success.

To discuss this or any other debt or bankruptcy related issue, contact us.