A Statutory Demand is a formal request for a debt to be paid. This blog post will give you a step by step guide on what to do if you receive one.
Deal with it immediately! Most demands require a response within 21 days. However beware so-called “short form” statutory demand which may require a response within forty-eight hours.
Choose Your Option
When you receive a Statutory Demand, you have four options on how to deal with it:
- Pay the debt- it may seem like an obvious one, but one of the ways to deal with a Statutory Demand is to settle the debt with the creditor.
- Reach an agreement to pay the debt – if you can't find all the money to pay the debt immediately, then you can contact the creditor and work out a payment plan that is mutually agreeable between the both of you.
*Both options 1 and 2 must be exercised within 21 days of when you receive the statutory demand*
- Contest the Statutory Demand- if you don’t agree with a statutory demand you’ve been given, you can challenge it and get it ‘set aside’ (cancel out the demand).
*Option 3 must be exercised within 18 days of when you receive the statutory demand*
- Do nothing – if you choose to do nothing when you receive the statutory demand it can lead to your company being wound-up by the court or if you’re an individual you can be made bankrupt. It should be noted that the non-compliance with the terms of a statutory demand will not automatically result in theses outcomes; however it is often considered to be the first step in the process
Contesting the Statutory Demand if You’re an Individual.
If you choose to contest the statuary demand, you must apply to the Court for it to be ‘set aside’.
The forms you can use to do this can be found at:
After you have filled in the forms, you should submit them to the court.
The court you should apply to should be named on your statuary demand. If there is not one named on your Demand, then you should apply to your Local sheriff court (Scotland) or your local county court (England).
Once you have submitted your application, the court will decide whether it agrees with your application.
If the court agrees with your application, they will arrange a hearing, in which both yourself and the creditor will present their case, and the judge will decide whether to set aside the statutory demand or not.
If the court does not agree with your application, it can give the creditor permission to issue bankruptcy proceedings against you.
Contesting the Statutory Demand if You're a Company
For a limited company, contesting a Statutory Demand is a bit more complicated and professional legal advice should be obtained. However in essence, if the company has a valid defence to the statutory demand, it can apply to the court to stop the creditor presenting a winding-up petition.
Ask for Help
If you are at all unsure about how to deal with a Statuary Demand it is a good idea to seek some professional advice, this can be from a solicitor or even a free advisory organisation such as the Citizen’s Advice Bureau or the Insolvency Service.
Contact MBM Commercial LLP
If you have any queries arising from this article, please contact our team of solicitors via our online contact form or call us now on 0131 226 8200.