Individuals: a statutory demand gives an individual 21 days to pay a debt. This can be a very intimidating document to receive because it can be followed by a bankruptcy petition and you may think that a solicitor or the courts are already involved. They need not be. Even if the amount owing is disputed, many people may think they have to ‘pay up’ when they receive a statutory demand.
When a statutory demand is issued, neither a solicitor nor the courts need to be involved. It is simply a matter of completing a form and sending it by recorded post to the supposed debtor. Frequently, it is used as a ‘scare tactic’ and it is successful because only 1% of cases are followed up with a bankruptcy petition.
If the amount owed is disputed, the statutory demand can be set aside – the Bankruptcy Court will stop the procedure and the creditor may be ordered to re-pay any costs you have incurred. However, a statutory demand must always be treated seriously. Ignoring it can be costly in terms of money and your reputation if bankruptcy, or the threat of bankruptcy, follows.Companies: if you or your company receives a statutory demand, you should contact us immediately. After taking your instructions, we will make an application to set this aside. We will also write to the creditor or their solicitor on your behalf.