Statutory Demand
Introduction to Statutory Demands
A statutory demand gives a person 21 days warning to pay the debt. After that the statutory demand has runs it course and it can followed by a bankruptcy petition.
In the minds of a creditor or a creditor’s solicitor a statutory demand is the legal equivalent of a 'warning shot from a gun'. This is because the average debtor is so scared by 'what may follow' that they usually pay up.
In fact statutory demands are so successful that in 99% of cases following the issue of a statutory demand a bankruptcy petition NEVER is issued.
Many creditors are so shrewd that use various internet websites to let the banks, credit reference agencies and other public interest groups to publicise the statutory demand which can be disastrous for someone.
- What is a statutory Demand?
- Why are Statutory Demands to powerful?
- What is the point of a statutory demand?
- When is a statutory Demand a threat?
- How to reduce the risk of bankruptcy following a statutory demand.
- The procedure to get a statutory demand set aside.
- What are the time limits to get a statutory demand set aside?
- What forms must be used to get a statutory demand set aside?
- Can the court dismiss an application to set a statutory demand set aside?
- What forms are typically used in the statutory demand process?
What is a statutory Demand?
A Statutory Demand is the first step to bankruptcy against an individual and this is prepared and served without any court involvement. A statutory demand can be served as soon as the debt is due and a judgment is not necessary. If the debtor disputes the claim, he or she can apply for the statutory demand to be set aside. The bankruptcy court will halt the bankruptcy if there is any dispute about the sum outstanding. It can be relatively easy for a debtor to have a statutory demand set aside and the process can result in an order for costs being made against the creditor.
Please note that a statutory demand in 90% of instances is 'bluffing technique' used to scare a person into paying up. If a bankruptcy petition does not follow then this will become apparent.
Why are Statutory Demands to powerful?
- The Statutory Demands procedure is simple to implement.
- To issue a statutory demand all you need to do is complete a form.
- You can send a statutory demand by recorded post, without the need of personal delivery.
- You do not need a solicitor to issue a statutory demand.
- You do not need to pay expensive court filing fees issue a statutory demand.
- People assume that a solicitor has been utilised so get scared and pay immediately.
What is the point of a statutory demand?
A statutory demands is supposed to make sure the person in debt pay the amount owing this is either carried out by paying in full or:-
- It is a way to get the debtor to offer his or her property as security or;
- It is a way to get the debtor pay up in another agreed way. Such as instalments.
When is a statutory Demand a threat?
- A statutory demand is something to worry about if your debts are over, say, £1000.
- A statutory demand is a threat if the person after the debt is wealthy enough to carry out the bankruptcy threat the whole way.
- A statutory demand is a cause for concern if the person after the debt is bitter and angry enough to actually make you bankrupt.
- If you are a home owner or actually have assets you are at risk of losing if you go bankrupt then a statutory demand is a threat.
- The person you owe the money to knows you are a home owner or have assets therefore is willing to spend money making you bankrupt.
- If your reputation is at risk by the public finding out about the statutory demand process being started against you.
How to reduce the risk of bankruptcy following a statutory demand.
- To avoid bankruptcy reduce the debt to less than £750.
- Offer to pay the debt by instalments.
- Make a reasonable offer to settle the debt.
- Apply to have the statutory demand set aside
The procedure to get a statutory demand set aside.
After the period of 21 day from the statutory demand being served the person issuing the statutory demand may begin the process that petitions the person’s bankruptcy.
One method of avoiding bankruptcy is to get the statutory demand set aside.
To successfully get a statutory demand set aside one or more of the following must be satisfied:-
- The amount stated on the statutory demand is disputed.
- The person issuing the statutory demand also owes money. This is called a counterclaim.
- The person issuing the statutory demand is holding security that equals or exceeds the amount owing.
- The demand was issued in error.
- The amount owing is less than £750
- Execution has been stayed on a judgement debt.
- The debtor is complying with an instalment order. This would mean the debt is not actually owed as it is being paid back.
- The creditor failed to comply with the rules and prejudiced the debtor in the process.
What are the time limits to get a statutory demand set aside?
An application to set aside must be made with 18 days of the statutory demand being served.
What forms must be used to get a statutory demand set aside?
Forms 6.4 (application) and 6.5 (affidavit) must be completed and taken to the court.
Can the court dismiss an application to set a statutory demand set aside?
Yes, if application if there are no reasonable ground to do so.
What forms are typically used in the statutory demand process?
- Form no: 4.1
Statutory Demand under section 123(1)(a) or 222(1)(a) of the Insolvency Act 1986
Download Form 4.1.pdf* - Form no: 6.1
Statutory Demand under section 268(1)(a) of the Insolvency Act 1986. Debt for Liquidated Sum Payable Immediately
Download Form 6.1.pdf* - Form no: 6.2
Statutory Demand under section 268(1)(a) of the Insolvency Act 1986. Debt for Liquidated Sum Payable Immediately Following a Judgment or Order of the Court
Download Form 6.2.pdf*
