What is a Statutory Demand?

A statutory demand is a formal written request for a debt to be paid. Any time a creditor is owed money, that creditor can issue a statutory demand, which allows the debtor as much as 21 days to either settle or secure the debt. If the debtor wishes to ask the court to set aside, or dismiss, the statutory demand, he or she has 18 days from the date the document was served.

The statutory demand must explain to the debtor its purpose and how the debtor must abide by the demand. It must also list a certain deadline by which the demand should be answered. Debtors have the right to apply to the court and request that the statutory demand be set aside, or dismissed, and they have to be informed of what will ensue if they fail to comply. If the debtor is an individual, bankruptcy proceedings may follow. If the debtor is a company, it may be facing winding-up proceedings.

When a creditor is owed more than ?750, that creditor may petition the court for a bankruptcy order against an individual or a winding-up order against a Company. Creditors who have already received a judgment against an individual or company for debts may have the judgment enforced by having bailiffs sent to the debtor's home or business. In the case of a Company if the creditor is unable to get the funds and they are owed a sum in excess of ?750, the creditor may then present a winding-up petition without having served a statutory demand.

A statutory demand does not expire, but the debt or default judgment must not exceed six years. This limit may be extended, and it can be restarted anytime the debtor agrees to its existence.

If you have been served with a statutory demand immediate action on your part may be able to prevent you from being personally bankrupted or your company from facing winding up proceedings. Neglecting a statutory demand can have devastating effects on your finances and reputation. You have a certain amount of time in which to comply with the statutory demand, either by settling or agreeing to pay the debt. If you disagree with the debt, you should take action to stop the creditor. It is wise to seek legal advice before requesting that your statutory demand be set aside. This is due to the fact that the law is complicated in this area and different technical defenses exist.

Your solicitor can help you better decide if you have grounds for which you can have the statutory demand set aside or if you have missed the 18 day deadline if you can apply to extend the 18 day period. Grounds for having the statutory demand set aside include a counter-claim that is equal to or greater than the original debt against the creditor the amount of the debt is in dispute or the debt is not for a liquidated sum.

Visit SetAsideStatutoryDemand.co.uk to learn more about how to set aside statutory demand.