A statutory demand is a formal demand made by a creditor for payment of a debt of more than £750. You have 21 days to reply to the statutory demand.
If you do not deal with a statutory demand within 21 days of receiving it, the creditor will take this as proof that you are unable to pay the debt and can then make you bankrupt.
It is vital that you act quickly when you receive a Statutory Demand if you are to avoid the creditor bankrupting you or applying for a Winding up Petition.
In today's testing economic climate creditors are increasingly resorting to Statutory Demand more quickly than ever before.
Often the use of Statutory Demands is inappropriate and in many cases they can be set aside by the Court. This will prevent a creditor from taking any formal insolvency process against you.
You could try to set aside the statutory demand on one or more of the following grounds.
- You have a claim against the creditor which is equal to or more than the debt.
- The debt is secured against property that is worth the same or more than the debt. (Your creditor does not have to accept an offer to secure the debt).
- The whole debt or the unsecured part of the debt is below £750.
- The debt is disputed and the court believes there are reasonable grounds for dispute.This might include where the creditor has waited too long to pursue the debt, or the debt is regulated under the Consumer Credit Act 1974 and there is no signed agreement.
- You may be able to argue that you can apply for a time order under the Consumer Credit Act 1974 instead.