Statutory Demands

I have put together some helpful detailed information for those who have been served with a Statutory Demand. If you are considering using this as a method of enforcement I have written a useful article which can be found here (link to page). I have also set out more relevant notes on our debt recovery pages. (link to pages)

A Statutory Demand is a formal demand for money due and it is usually the first step taken when making someone bankrupt. In order for a creditor to rely on a Statutory Demand the debt owed must be at least £750.

Ideally a Statutory Demand should be personally served to an individual, usually by a process server who will visit your home or place of business to hand the demand to you directly. Sometimes creditors will send a Statutory Demand though the post and on occasion I have seen them faxed or emailed. They are never safe to ignore and however they are received Statutory Demands should be acted upon.

Agreement on Debt

If the money claimed by the creditor is due and owing, it is important to try to come to an agreement with the creditor about how the debt can be paid, or if some security can be offered for the debt. Remember that in most cases a creditor will not want to make a debtor bankrupt because it can be an expensive process.

A Statutory Demand can be used as an alternative to commencing proceedings through court. Alternatively it may be used as a method of enforcement for a creditor who already has a judgement which has been unpaid. If a Demand follows a judgement given by the court it can be difficult to challenge, however if it is being used as an alternative to issuing proceedings then the debtor may be able to challenge the debt claimed by the creditor.

If a debt is disputed there is a mechanism for setting aside a Statutory Demand and the debtor must apply to their local bankruptcy court to have the Demand set aside. This application must explain why the debt has not been paid and why it is disputed. Applications should be made at the earliest possible opportunity in order to get Demands set aside.      

Once the application has been made it will be listed for hearing and the creditor will have an opportunity to respond to the application and supporting witness statement. If a creditor is not willing to withdraw their Statutory Demand the court will hold a hearing to decide whether or not it is appropriate for the demand to be relied upon or set aside. The hearing is a good opportunity for the debtor to challenge his or her debt and give themselves a chance of defending any action that may be brought through the courts or of resolving matters with the creditor.

The above is a general guide to this topic and your own situation will be unique to you and your circumstances. There is no substitute for specialist advice tailored to your specific needs.

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