What action do I take if a creditor serves me a statutory demand?

If a creditor serves you a statutory demand, there are things that you can do.   The first is that you do not need to panic.  However, seeking immediate legal advice from a lawyer would be advisable.

Any creditor owed more than £750 can serve a statutory demand notice which should never be ignored. As it could lead to you being made bankrupt or your company being wound up by the court.

So what do I do?

To avoid being made bankrupt or facing a winding up order you must comply with notice within 21 days. If you agree with the creditor you can settle the debt or arrange an agreement for payment.

If you dispute it and you think you have that you have reasonable grounds to do so, you should take immediate action.  This will stop the creditor presenting a bankruptcy or winding-up petition.

How do I do this?

You have 18 days from when the demand is served on you to apply to the court for it to be set aside or cancelled.

If you want to apply to set aside a statutory demand, you must apply to the High Court, using application form 6.4 and form 6.05,  the affidavit in support of an application, to set aside a statutory demand.

What will the High Court do?

The High Court will consider various grounds on which you can apply to set aside the statutory demand.

Do you the debtor have a counter-claim, set-off or cross-demand which is equal to or greater than the amount specified in the statutory demand?

The debt can disputed on grounds the High Court considers to be substantial

The creditor has not disclosed some security or the High Court is satisfied that the value of the security is greater than or equal to the amount claimed

The High Court is satisfied on other grounds that the demand ought to be set aside

It is vital that you attend the court hearing. If you fail to do so the court will dismiss your application to have the statutory demand set

If the application is dismissed, your creditor can immediately apply to make you bankrupt. Also, you may have to pay court costs if your application is dismissed.

If your application is successful, the statutory demand will be cancelled, or set aside. However, depending on the reason why it was set aside, you may need to continue negotiating with your creditor about the debt, or they could try again to make you bankrupt at a later date.

If you need help and advice on regarding a statutory demand, please contact us.   Alternatively, if it is for another legal matter please see Legal Services for Individuals.