What is a Statutory Demand?
In simple terms, a statutory demand is a formal, written request for payment of a debt. If a company or individual receives a statutory demand they then have 21 days, either to pay the amount owed, agree terms for repaying it or challenge it.
Statutory demands should never be ignored as, in a worst case scenario, it may result in bankruptcy for an individual or in a company being wound up. There are certain circumstances where a statutory demand would not be the best way to recover a debt, such as if a debt is disputed or if the debt is over six years old.
Received a demand for money?
- Have you been served with a Statutory Demand?
- Do you dispute that the alleged debt is owed?
- Do you have a cross-claim that meets or exceeds the level of the alleged debt?
- Does the debt exceed £750.00 (for a company) or £5,000.00 (for an individual)?
If the answers to the above questions are ‘yes’, then you need to take immediate steps to protect your personal or corporate solvency.
Whilst there are currently restrictions on the circumstances in which a statutory demand can be served, they could still potentially be a valid way of obtaining monies owed and should be taken seriously if you receive one.
If you have been served with a Statutory Demand seeking to recover in excess of £750.00 and you dispute that the sum is owed, you only have 21 days from the date of service of the Statutory Demand to apply to Court to restrain the creditor from presenting a Winding up Petition against your company. If you fail to do so, the creditor would be entitled to present a Winding up Petition at Court against your company. This can have profound ramifications for the company – if a Winding up Petition is presented, the company will (amongst other things): - Quite likely find that its bank accounts have been frozen, paralysing its ability to trade; - Face calls from other creditors of the company to pay their debts as well, increasing strain on the company’s cashflow
If you have been personally served with a Statutory Demand seeking to recover in excess of £5,000.00 and you dispute that the sum is owed, you only have 18 days from the date of service of the Statutory Demand to make an application to Court to set aside the Statutory Demand. If you fail to do so, the creditor would be entitled to present a Bankruptcy Petition at Court to petition for your bankruptcy. This can have profound ramifications for you – if a Bankruptcy Order is made against you, it will prevent you from (amongst other things): - obtaining credit, or obtaining it at commercially favourable rates for potentially up to 6 years or more; - being employed in certain professional roles; - dealing with your assets, without permission of a Trustee in Bankruptcy.
Our litigation solicitors are experts in opposing Statutory Demands that have been served upon both individual and corporate debtors. You will receive pragmatic and pro-active advice at all stages in the robust defence of your position. Do not delay in contacting us if you have been served with a Statutory Demand – as the clock is ticking - so that we begin to protect your position immediately.