Legal Advice on Statutory Demands

In many cases a debtor ignores a creditor’s demand for payment of their debt, for a multitude of reasons. Issuing a statutory demand however concentrates a debtor’s focus as the repercussions of not answering or dealing with the demand can be severe.

Farleys act for both creditors and debtors to provide the fast and effective advice you need to issue a statutory demand or formulate your response.

What is a Statutory Demand?

A statutory demand is a document that is sent to notify a debtor that if they do not pay the debt within 21 days, bankruptcy proceedings may be issued. They are used when a creditor is:

• Pursuing an individual for a debt higher than £5,000; and

• The debt is not disputed.

When serving a statutory demand, the creditor is obliged to do all that is reasonable to bring the statutory demand to the debtor’s attention. To do this, the usual step is to use a process server, to ensure that it is personally served.

If a statutory demand is not complied with, a creditor can petition for the debtor’s bankruptcy in the next 4 months.

To avoid bankruptcy proceedings, a debtor must act straight away and the first action is to ensure that you are in the best position possible to reply. To do this we recommend seeking legal advice as soon as possible.

Replying to a Statutory Demand

If you owe the debt and are able to pay, to prevent further action you can pay the debt in full during the 21 day period and the demand will be satisfied. There will be no record of the demand on your credit file. In some cases, it may be possible for you to negotiate a payment plan with your creditor.

If you do not owe the debt, or dispute its contents, you have the option to apply to court to set it aside. To do this, you will need to provide the court with a reason as to why it is incorrect, for example:

• The debt is actually below the bankruptcy limit of £5,000;

• You dispute the debt; or

• The debt is statute barred and permission is needed from court to enforce it.