Statutory Demands

A Statutory Demand is a legal notice from a creditor giving 21 days to settle a debt otherwise bankruptcy proceedings may follow.

The creditor issuing the Statutory Demand has done so at some cost believing you are able to pay the debt plus any fees, for example:

• You have access to enough funds.
• You are a home owner with enough equity in your property.
• You have other assets that could be seized to cover the debt.

I’ve Received A Statutory Demand – What Should I Do?

Do Not Ignore A Statutory Demand
If you don’t repay the debt in full or come to some other arrangement within 21 days, the creditor can apply to make you bankrupt, unless the demand is withdrawn or set aside.

Your options are:

• Apply to the Court to have the demand set aside (cancelled).
  If you believe the demand has been issued in error or is unjustifiable or you a have good reason to dispute the debt you can apply to the court to have it cancelled. Some of the reasons to be able get a statutory demand set aside are technical, so it’s important to get advice about whether you have grounds to make a challenge.
• Pay the debts in full or by instalments.
  The creditor may accept payment terms other than laid out in the Statutory Demand. After all, they are looking for the best return possible and this may be more than by bankruptcy.
• Ask for the debt to be forgiven.
  If you do not have the means to pay the the debt and can prove this, the creditor may cut their losses and agree to write-off the debt.
• Offer security against the debt.
  If you own your home or other assets, you could offer the creditor security on it which can be held against your debt.  In other words, making it into a secured debt. This is called a voluntary charge. You should always take specialist advice before agreeing to a voluntary charge on your home.
• Entering into a individual voluntary arrangement (IVA)
  If you have multiple debts and some valuable assets or able to make regular payments you may be able to enter into an IVA.
• Reduce the debt to below £5,000.
  This is minimum debt value for which a creditor can issue bankruptcy proceedings.
• Do nothing and allow yourself to be made bankrupt.
  This may be your only option, but you should not allow this to happen without taking professional advice.

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