A statutory demand is a formal demand for payment of a debt of at least £5,000. A Statutory demand is served by a creditor before they try to make you bankrupt. Some creditors will serve a statutory demand as a strategy to persuade you to pay your debts.
Certain information must be included on the demand, such as your details creditor details and information about the debt the creditor is claiming.
You have up to 18 or 21 days to reply to the statutory demand, depending on what you want to do, from the date the demand was served on you. When a document is ‘served’, it means that it has been delivered to you in the correct way. The creditor may serve a statutory demand on you personally, by first class post, by putting it through your letterbox or by advertising in the newspaper. If the demand is served by post, the date of service is usually two business days after the date of postage.
Setting aside a Statutory Demand
It is possible for a creditor to make you bankrupt without using a statutory demand. For example, if a creditor has a county court judgment which they have been unable to enforce, they can make you bankrupt without sending you a statutory demand first. Also, if you have set up an individual voluntary arrangement (IVA) to deal with your debts and it fails, the insolvency practitioner or creditors could make you bankrupt without sending you a statutory demand.