Have You Been Served A Statutory Demand?
Statutory Demands have serious consequences for you if not handled correctly. Read on to find out what this means for you and your finances.
A statutory demand is a formal request for repayment of a sum of money that is owed. Statutory demands can be used as a tactic to scare debtors but, they are the first step in the process of making you bankrupt. If you owe more than £5,000 you can be on the receiving end of a statutory demand. This is the pre-cursor to bankruptcy.
Because of these serious consequences and because of the time limits, these formal demands should always be taken seriously and dealt with immediately.
“Why Have I Received a Statutory Demand?“
As mentioned above, statutory demands can be issued to individuals for unpaid debts of £5,000 or more. They are mostly used when a creditor claims that you owe them money, often when the debt is disputed.
They are not a legal debt recovery tool but a demand to pay a debt. Quite often, this is used by creditors as a quick and easy way to scare you into paying your debt.
However, this does not mean that they are not serious. Once you have received a statutory demand, you have 18-21 days to respond. If you do not act within these 21 days, you will likely face bankruptcy.
After 21 Days
Statutory demands are time-bound, meaning you have a very limited amount of time to decide what you are going to do. There are 2 time limits for these statutory demands:
- 18 days: You have 18 days from the date you are served the demand to apply to have it set aside.
- 21 days: You have 21 days to come to an arrangement with the creditor. This could involve paying the debt, entering a payment plan or coming to some alternative agreement.
If you put in an application to set aside the statutory demand, the 21-day limit is effectively paused while the court considers your application.
If you do not respond within 21 days or your application is rejected, the issuer can apply for your bankruptcy. At this stage it is not too late to act but, it makes it much more difficult. If you are made bankrupt, a trustee will be appointed to repossess your assets and sell them to pay off your creditors. You can read more about the bankruptcy process and the ramifications of bankruptcy here.
How To Respond To A Statutory Demand
The process is quite simple and there are standardised processes for responding to statutory demands. There are a few possible approaches:
- Do nothing – You can simply choose to ignore the demand. This is the worst possible option. If you do not respond, the statutory demand will be seen as proof that you owe the claimed amount. At this point, it is very likely that your creditor will either begin legal action or apply to make you bankrupt.
- Pay the debt – If you know you owe the debt or the creditor has overwhelming evidence, you can simply pay the debt or, come to a payment arrangement e.g. monthly instalments.
- Defend/set aside the demand – This is possible if you believe the demand has been falsely issued, the amount is incorrect, the process for serving has not been followed or a variety of other factors. You can send an application to have the statutory demand cancelled. Although this sounds simple, it does still require evidence and often legal arguments. Applications can be rejected if not handled correctly so it is important to know what you are doing here.
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Whatever You Choose, do it Now.
As with many debts, the longer it is ignored, the more difficult it is to defend a statutory demand and, the worse the outcome will be for you. Obviously, statutory demands are particularly time sensitive. At no point is it too late to avoid the consequences however, delays make it much more costly and difficult. Often a statutory demand can see a small debt be turned into a bankruptcy that puts your home, assets, and finances on the line.
Our team have been helping those who have received statutory demands by setting aside, negotiating with creditors and reaching settlements. As mentioned above, the key here is to act as soon as you can. It will make it easier to set aside and statutory demand and, result in a more favourable outcome in the end.
Don’t wait until your assets are at risk, make the first move and contact our specialist team for your free initial case review today.
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