Statutory Demands

A Statutory Demand is a legal notice from the creditor to a debtor giving 18 days to settle a debt otherwise a bankruptcy petition may be issued.

The demand will state the debt must be paid in full or by installment subject to terms acceptable to the creditor. The option to secure the debt on a property may also be offered. A creditor does not need an existing court order to issue a statutory demand. If a satisfactory response is not forthcoming from the debtor, then the creditor can issue a creditor's petition which is an application to the court to grant a bankruptcy order.

Some creditors may use a statutory demand as form of debt collection; a scare tactic when they have little intention of pursuing bankruptcy.

Ignore a Statutory Demand at your peril! you may find yourself unexpectedly bankrupt.

I've received a statutory demand. What should I do?

If you have received a statutory demand, your options are:-

• Comply with the demand.
• Negotiate repayments either directly with the creditor or via an agency such as ourselves.
• Make a payment to bring the debt to under £750, the minimum debt for a creditor's petition for bankruptcy. At least this will avert that particular crisis.
• Contest the demand.

You could contest the demand if:-

• There is substantial dispute over the money owed. This can't be the case when there is currently a court order outstanding against the debt.
• There is a cross claim with the same creditor which equals or exceeds the claims of the creditor.
• You have assets exceeding the value of the claim, in which case bankruptcy would not be appropriate.
• The demand has not been served correctly, for example incorrect details or not signed.
• The debt is statue-barred.

Contesting a Statutory demand

An application to the court to set aside a statutory demand is made using a form 6.4 with a supporting affidavit form 6.5. The application is put before a district judge who may dismiss it without hearing if there are no grounds for the application; otherwise a court date is set. The court will not dismiss the statutory demand on the grounds that the creditor would not negotiate the terms of the demand or enter into a deal brokering.

How Harrington Brooks Can Help

Please call us for advice if you are concerned about a statutory demand. We will guide you in the right direction, whatever your financial circumstances.

Many of our clients have been issued with statutory demands before seeking our help; and we have be able avert the personal disaster which is bankruptcy. We'd look at all your debts; your income and all your financial commitments. This results in a common financial statement. This document defines your ability to repay your debts using creditor agreed levels of expenditure for living costs, including items such as mortgage or rent, food, fuel and other household expenditure.

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