You have just received a statement of claim — what should you do?
First, don’t throw it in the recycling bin as it will be recycled in a way that you do not expect. If you have received a claim and statement of claim, you have 28 days from the date you received it (otherwise known as service) to consider your options and, if necessary, file a defence.
If you choose to ignore or throw the claim into the recycle bin, the following may occur:
Deciding to ignore a claim and statement of claim can have unintended consequences. If after 28 days, you have done nothing, the party (plaintiff) who issued the statement of claim against you may apply to the court to have default judgment entered against you. They may then seek to enforce the judgment to recover the debt by, for example:
- Requesting an enforcement hearing from the court where you will be required to submit a financial statement then be cross-examined about your finances; or
- You may be issued with a garnishee order to deduct payments from your wages or any rental income you usually receive to pay the debt; or
- A writ may be issued allowing a bailiff to seize your personal property to pay for the debt; or
- Bankruptcy proceedings may be commenced against you; or
- If you are a company, a statutory notice of demand may be filed against your company to wind it up; or
- A combination of the above.
If a judgment is entered against you (or your company) this can affect your credit rating and may make it difficult for you to obtain credit in the future.
What should you do if you receive a claim and statement of claim?
First and foremost, seek legal advice about your options with regard to the facts and circumstances of the claim against you. Being proactive will allow you to take better control of the dispute. A recycle bin approach will not help.
There are several options which may be available to you, for example:
- You may have a valid defence to the claim and should file a defence and defend yourself in Court proceedings; or
- You may be able to negotiate with the party that issued the statement of claim to reach a settlement without having to resort to protracted and costly Court proceedings; or
- You may admit that you owe the amount claimed in the statement of claim. You may be able to negotiate an agreement with the other party to pay the amount claimed by way of instalment payments; or
- You may be able to include a third party who should be a party to the Claim.
If you have been served with a claim and statement of claim, be proactive and contact Porta Lawyers as soon as possible. We act for both plaintiffs and defendants (not at the same time).