Challenging a Statutory Demand

What is a statutory demand?

A statutory demand is a formal written demand for payment of a debt. It is a legal document that can be issued by a creditor to a debtor as a precursor to legal action to recover the debt. Statutory demands are often used in the context of business debts.

The debtor is typically given a specific time limit, often 18 to 21 days, to either pay the debt or reach an agreement to settle the debt. If the debtor fails to comply within the specified time frame, the creditor may take further legal action.

If the debtor fails to respond to the statutory demand within the stipulated time, the creditor may proceed with legal action. This action may include filing a winding-up petition or issuing a bankruptcy petition, depending on the nature of the debtor (individual or company).

Challenging a statutory demand

If you have received a statutory demand, you may apply to the court to set aside the statutory demand. This may be on grounds such as a genuine dispute about the debt, a defect in the demand, or other valid reasons. Setting aside the statutory demand stops or dismisses the demand made by the creditor. 

You can challenge a statutory demand using an application to set aside a statutory demand. This can be done if you believe that the debt is not valid or if you are unable to pay the debt. You must apply to the court to have the statutory demand set aside within 18 days of the demand being served.

You may be able to challenge the demand after 18 days as long as the creditor has not yet filed for bankruptcy. Additionally, in the application form to have the demand set aside you must fill in additional information in the ‘witness statement’ section regarding your reasons to challenge and why it is later than the 18 day timeframe.

There are specific grounds on which a debtor can apply to set aside a statutory demand. Common substantial grounds include:

1. The debt is disputed
2. The debt is less than the statutory minimum.
3. Defects in the form or content of the demand.
4. The debtor has a counterclaim, set-off, or cross-demand that equals or exceeds the amount of the debt.

Upon receipt of you application, the Court will set a hearing date. To challenge a statutory demand, you will need to provide the court with evidence to support your case.

If the court is satisfied that your reasons for challenging the statutory demand are valid, it will set aside the demand. This means that the creditor will not be able to take you to court for the debt.

However, if the court is not satisfied that your reasons for challenging the statutory demand are valid, the demand will stand. This means that the creditor may be able to take you to court for the debt, and if you are found to be liable, you may be ordered to pay the debt and any legal costs or court costs.

It is important to note that challenging a statutory demand is a complex legal process. If you are considering challenging a statutory demand, you should seek legal advice from a qualified debt advisor or solicitor.

How can Expert Commercial Law assist?

Our panel of solicitors have many years of experience in dealing with challenging a statutory demand and can assist in all aspects of debt recovery proceedings including mediation, county court proceedings and negotiation.

Our panel firms can also assist creditors in serving a statutory demand for unpaid debts.

We understand the complexities and emotional toll that come with challenging a debt. Our panel is highly skilled and have a deep understanding of this area of law, and are dedicated to providing tailored and compassionate support to each of our clients.

Our commitment to excellence and our track record of successful outcomes are testament to our ability to deliver results. You can trust that our panel firms will work tirelessly to achieve the best possible outcome for your case, without the financial burden of upfront fees. Choose us for dedicated and experienced representation.

We only connect you with the best solicitors

All of the solicitors on our panel have the experience and expertise required to take on your case. Each solicitor is vetted before being allowed onto our panel and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our solicitors also help with commercial claims, such as partnership disputes, breach of contract and CCJ removal.