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Statutory demands and bankruptcy

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A statutory demand is a way to demonstrate that you are owed an undisputed sum of money by an individual, the sum owed exceeds £5000 and the debtor hasn’t paid it.

A statutory demand is a way to demonstrate that you are owed an undisputed sum of money by an individual, the sum owed exceeds £5000 and the debtor hasn’t paid it. The debtor has 3 weeks to make payment of the debt once he/she has been served with a statutory demand. If the debtor fails to make payment, the creditor can present a bankruptcy petition against the debtor for him/her to be declared bankrupt.

Serving a Statutory Demand

The statutory demand must be in the prescribed form and meet the strict requirements as set out in rule 10 of the Insolvency Rules 2016. It must be completed and served correctly.

The statutory demand must be served personally on the debtor. If this cannot be done, other methods of service may be accepted by the court. For example, if you have a judgment against the debtor who is attempting to avoid service of the statutory demand, the rules permit you to advertise the statutory demand, which may be treated as good service of the demand.

You can present a bankruptcy petition from any time after 21 days from the date of service (providing it is not formally challenged by the debtor) but you must present the petition within 4 months of service of the demand. If a petition is not presented within the 4 months’ time limit, a fresh demand may need to be served.

Serving a statutory demand can be a quick and inexpensive way to ascertain whether a person intends to pay the money owed to you. However, should you get it wrong, and the debtor applies to set-aside the statutory demand, you may have to pay his/her legal costs.

Challenging a Statutory Demand

A statutory demand is treated as valid unless it is set aside by the court. You have 18 days to apply to the court to set the statutory demand aside. If you do not do this in time and a bankruptcy petition is presented against you, the right is lost.

The steps required to apply to the court:

  • The application to set aside the statutory demand must be issued by the court;
  • The application form must be accompanied by a witness statement;
  • The application will be stamped with the court seal and given a hearing date.

Once this happens, the time for compliance with the statutory demand stops running until the application is decided by the court. If any of the documents are not in the right form, set out sufficiently to challenge the demand, sent in to the right court or received by the court, the application may not be issued in time and you will have to apply to the court for an extension of time.

Note: this could be an expensive and high risk process and it is important to get the application to set aside the statutory demand right.

Below we set out some of the ways in which you may be able to challenge or respond to a statutory demand served on you:

  • There is a genuine dispute on substantial grounds. Case law states that the dispute “must be real as opposed to frivolous”;
  • You have a counterclaim, cross-demand or set-off that is equal to or exceeds the debt;
  • There may be procedural grounds by which the statutory demand can be challenged. For example, the statutory demand may not be served on you in accordance with the rules or the statutory demand may not contain sufficient information concerning the debt;
  • You may be able to negotiate a payment of the debt in instalments; however, you should be mindful that whilst negotiations are ongoing, the creditor has the ability to issue a bankruptcy petition against you. Therefore, it is best to obtain confirmation (preferably an undertaking) from the creditor that they will not issue a bankruptcy petition until negotiations are concluded;
  • If you do not dispute the debt or are unable to find suitable grounds to challenge the statutory demand, then you can make payment of the debt.

If you are a creditor and wish to serve a statutory demand on an individual, please see our debt collection price guide, which sets out our fixed fees for preparing and serving a statutory demand.

If you are an individual who wishes to challenge a statutory demand, we shall provide you with an estimate of our fees based on the type of work required.

For more information, please email litigation@grantsaw.co.uk or contact our insolvency experts on 020 8858 6971.

Meet the Statutory demands and bankruptcy team
Ray Crudgington
Managing Partner
greenwich
02083054224
ray.crudgington@grantsaw.co.uk
Maria Lati
Partner
Head of Residential Property
blackheath
02083054229
maria.lati@grantsaw.co.uk
Mike Clary
Partner
Head of Family
greenwich
02083054237
mike.clary@grantsaw.co.uk
Kalpa Prajapati
Partner
Head of Private Client
blackheath
02083053536
kalpa.prajapati@grantsaw.co.uk
Mario Savvides
Partner
Head of Commercial Property
greenwich
02083053531
mario.savvides@grantsaw.co.uk
Sarah-Kate Jackson
Partner
Head of Litigation
greenwich
02083054236
sarah-kate.jackson@grantsaw.co.uk
Adina-Leigh Collins
Litigation
Solicitor
greenwich
02083053556
adina-leigh.collins@grantsaw.co.uk
Aimal Gram
Commercial Property
Solicitor
greenwich
02083053524
aimal.gram@grantsaw.co.uk
Aisha Mohammed
Residential Property
Solicitor
greenwich
02083054228
aisha.mohammed@grantsaw.co.uk
Aishat Balogun
Aishat Balogun
Family
Solicitor
greenwich
02083054214
aishat.balogun@grantsaw.co.uk
An Le Tran
Commercial Property
Professional Support Solicitor
greenwich
02083054226
anle.tran@grantsaw.co.uk
Angus Young
Litigation
Solicitor
greenwich
02083054225
angus.young@grantsaw.co.uk
Atifha Aftab
Atifha Aftab
Family
Solicitor
greenwich
02083054238
atifha.aftab@grantsaw.co.uk
Bimal Kotecha
Litigation
Solicitor
greenwich
02083053523
bimal.kotecha@grantsaw.co.uk
Charlotte Warren
Charlotte Warren
Private Client
Solicitor
blackheath
02083054231
charlotte.warren@grantsaw.co.uk
Claire Mac Mahon
Litigation
Solicitor
greenwich
02083053537
claire.macmahon@grantsaw.co.uk
Deborah Taite
Residential Property
Solicitor
blackheath
02083053542
deborah.taite@grantsaw.co.uk
Emily Pearce
Residential Property
Solicitor
greenwich
02083053526
emily.pearce@grantsaw.co.uk
Georgia Beales
Litigation
Paralegal
greenwich
02083054206
georgia.beales@grantsaw.co.uk
James McKimm
James McKimm
Corporate and Commercial
Solicitor
greenwich
02083054217
james.mckimm@grantsaw.co.uk
Jeremy Brooks
Jeremy Brooks
Private Client
Solicitor
blackheath
02083053534
jeremy.brooks@grantsaw.co.uk
Joanna Godden
Notary Public
Notary
greenwich
02083083535
joanna.godden@grantsaw.co.uk
Kim Whitaker
Kim Whitaker
Corporate and Commercial
Head of Corporate and Commercial
greenwich
02083053539
kim.whitaker@grantsaw.co.uk
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Maleeha Iqbal
Residential Property
Licensed Conveyancer
greenwich
02083054232
maleeha.iqbal@grantsaw.co.uk
Mandeep Clair
Family
Solicitor
greenwich
02083054235
mandeep.clair@grantsaw.co.uk
Michael Pope
Employment
Consultant Solicitor
greenwich
02083053540
michael.pope@grantsaw.co.uk
Michelle Pinnington
Michelle Pinnington
Residential Property
Solicitor
greenwich
02083054216
michelle.pinnington@grantsaw.co.uk
Noella Gooden
Employment
Solicitor (Australian qualified)
greenwich
02083053543
noella.gooden@grantsaw.co.uk
Raj Waghela
Raj Waghela
Residential Property
Solicitor
greenwich
02083053529
raj.waghela@grantsaw.co.uk
Randeep Thethy
Randeep Thethy
Residential Property
Solicitor
greenwich
02083054209
randeep.thethy@grantsaw.co.uk
Sarah Conner
Sarah Conner
Private Client
Solicitor
blackheath
02083054234
sarah.conner@grantsaw.co.uk
Simran Lalli
Simran Lalli
Employment
Solicitor
greenwich
02083054208
simran.lalli@grantsaw.co.uk
Susan Collins
Commercial Property
Solicitor
greenwich
02083054200
susan.collins@grantsaw.co.uk
Tatiana Zenina
Tatiana Zenina
Private Client
Solicitor
blackheath
02083054239
tatiana.zenina@grantsaw.co.uk
Trisha Djemal
Trisha Djemal
Residential Property
Consultant Solicitor
blackheath
02083053546
trisha.djemal@grantsaw.co.uk
Tyrone Grant
Residential Property
Head of Leasehold Enfranchisement
blackheath
02083053522
tyrone.grant@grantsaw.co.uk
Denise
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@grantsaw.co.uk
Kasia
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Michael Tobin
Michael Tobin
Support Staff
Marketing and Business Development Manager
greenwich
02083053550
michael.tobin@grantsaw.co.uk
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk