Statutory Demand

Think of a statutory demand as a form of written warning from your creditor…but it is more than that – it is serious. If you ignore it and you are an individual or even a partner it could lead to bankruptcy.

If you have missed a payment or have in some way fallen foul of the rules you originally agreed with them, the statutory demand signals your creditor’s intent to take you to court.

As the court proceedings will be aimed at making you bankrupt (if the debt is £5,000 or higher), if you have received a statutory demand, we have some valuable advice to help guide you through the process.

What should I do with the statutory demand?

Don’t ignore it. Read it carefully. You’ll need to comply within twenty one days of the demand’s issue date. Just like CCJs, you can either settle it there and then or agree a payment plan.

I don’t agree with the statutory demand. How do I appeal?

If you feel you have good reason to dispute the statutory demand, first take legal advice to ensure you have a valid claim. If you do, you have eighteen days to ask the court to either set it aside, cancel or dismiss. If they agree to do so, the creditor may then be prevented from conducting any further attempts to make you bankrupt.

What can I contest?

There may be a few reasons the demand may be unjust:

• The debt is statue barred (it is no longer enforceable because of the length of time which has passed since you acknowledged the debt)
• A counterclaim with the same creditor exists and it exceeds or equals this new claim
• The statutory demand has been poorly served (i.e. no signature, incorrect details, etc)

Should I contact the creditor directly?

This is advisable. Picking up the phone and talking to your creditors can often settle disputes. If you genuinely have no way of repaying what you owe, be honest and tell them. You could ask them to write off the debt or arrange an alternative payment plan. Although it can’t be guaranteed, they may agree to do so if they realize there is nothing to be gained from taking you to court.

Final thought on statutory demands

Remember – the sole aim of a statutory demand is to make you bankrupt due to non-payment of a debt. Some creditors use statutory demands as a scare tactic. If you can reduce the debt below £5,000, the demand effectively becomes void, as your creditor won’t be able to apply to make you bankrupt.

Speak to your creditor. You can do a lot worse. Most will listen and, if you’re honest, it may lead to the debt being wiped off entirely.