A statutory demand is one of the most serious debt documents you can receive. It's a formal legal demand for payment of £5,000 or more (for individuals) and is the first step towards bankruptcy proceedings. You have exactly 21 days to respond.
A statutory demand is a formal document served under the Insolvency Act 1986. If you don't pay, secure the debt, or have it set aside within 21 days, the creditor can apply to court to make you bankrupt (if you're an individual) or wind up your company (if it's a business). This is why the 21-day window is so important. However, a statutory demand can be 'set aside' (cancelled) by the court if the debt is disputed, if there's a counterclaim, or if there are other valid reasons to challenge it. The threshold for individuals is £5,000.
Do not ignore this document. After 21 days without response, the creditor can file a bankruptcy petition. This is one of the most serious debt situations you can face.
If you dispute the debt, have a counterclaim, or believe the demand is defective (wrong form, wrong address, wrong amount), you can apply to court to set it aside within 18 days of service.
File an application at your local county court. There is a fee. Grounds include: genuine dispute about the debt, an offsetting counterclaim, or the demand doesn't comply with the rules.
If the debt is legitimate, contact the creditor urgently. Many creditors serve a statutory demand as a 'shock tactic' and are open to a payment plan or settlement to avoid costly court proceedings.
Given the 21-day window and bankruptcy implications, this is the one situation where getting urgent legal advice — even for a one-hour consultation — is strongly recommended.
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After 21 days, the creditor can present a bankruptcy petition to court. A bankruptcy order would mean your assets are seized and distributed to creditors, and it affects your credit for 6+ years.
Yes. If you genuinely dispute the debt (or any part of it), have a counterclaim, or the demand is defective, you can apply to court to set it aside. You must do this within 18 days of being served.
The demand itself doesn't — but if a bankruptcy order follows, that absolutely does. This is why responding within 21 days is so important.
For individuals: £5,000. For companies: £750. Below these amounts, a statutory demand cannot be used to start bankruptcy/winding-up proceedings.
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