Challenging a Statutory Demand - All you need to know

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.

Some key points about statutory demands include:

  • Formal Requirement: Statutory demands must comply with specific legal requirements regarding their form and content. Failure to meet these requirements may render the demand invalid.
  • Debt Threshold: A statutory demand can only be issued for debts that exceed a certain monetary threshold. The threshold varies by jurisdiction.
  • Time Limits: The debtor is typically given a specific period, 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.
  • Consequences of Non-Compliance: If the debtor fails to respond to the statutory demand within the stipulated time, the creditor may proceed with legal action, such as filing a winding-up petition or issuing a bankruptcy petition, depending on the nature of the debtor (individual or company).
  • Setting Aside a Statutory Demand: In some cases, a debtor may apply to the court to set aside a statutory demand. This may be on grounds such as a genuine dispute about the debt, a defect in the demand, or other valid reasons.

Legal advice should be sought if you are involved in a situation involving a statutory demand, whether as a creditor or a debtor, to ensure compliance with the applicable laws and to understand your rights and obligations.

Expert Commercial Law have access to a highly experienced panel of solicitors who can assist with disputes involving statutory demands. If you would like more information on how we can assist you then please get in touch with us today.

Serving a statutory demand

To serve a statutory demand, you must deliver the demand form to the debtor by one of the following methods:

  • Personal service: You can give the demand form to the debtor in person. This is the most reliable method of service, as it provides you with proof that the debtor has received the demand.
  • Registered post with a certificate of posting: If you cannot serve the demand in person, you can send it to the debtor by registered post with a certificate of posting. This provides you with evidence that the demand was sent, but it does not guarantee that the debtor has received it.
  • Leaving it at the debtor’s registered office: If the debtor is a company, you can leave the demand form at its registered office. This is a valid method of service, but it is important to make sure that the registered office is accurate.
  • Leaving it at the debtor’s principal place of business: If the debtor is not a company or does not have a registered office, you can leave the demand form at its principal place of business. This is a valid method of service, but it is important to make sure that the principal place of business is accurate.

Once you have served the demand form, you should keep a copy of the proof of service for your records.

Can you challenge a statutory demand?

You can challenge a statutory demand (application to set aside a statutory demand) 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 receiving it. 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. Disputing the debt.
  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.

To challenge a statutory demand, you will need to provide the court with evidence to support your case. This evidence may include:

  • Evidence that the debt is disputed. For example, you may have a contract that shows that you do not owe the money, or you may have evidence that the debt is statute-barred, meaning that it is too old to be enforced.
  • Evidence that you are unable to pay the debt. This may include evidence of your income and expenses, or it may be a letter from a debt advisor confirming that you are on a debt management plan or that you are otherwise taking steps to repay your debts.

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 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.

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 disputesbreach of contract and CCJ removal.

 

 

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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm. 

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