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What is a statutory demand — and what to do if you are served

AuthorsSuzi Gardener

5 min read

Litigation & Disputes

What is a statutory demand and what to do if you are served

One of the ways in which a creditor may try and recover debt from an individual or company is through serving a statutory demand. Here, litigation specialist Suzi Gardener explains what a statutory demand is and what to do if you are served with one.


What is a statutory demand?

A statutory demand is a written demand that a creditor may serve on an individual or company where there is an outstanding debt. It is not a court document and does not start court proceedings, but it is important that the correct demand is used. The demand should show how the debt has arisen and — if there is any interest claimed — how this has been calculated.

Whether you are an individual or a business owner, your financial standing is of great importance and can be affected detrimentally when things go wrong. Increasing prices and bills, as well as reducing profit margins, are naturally a worry for many in the current climate, which carries an increased risk of falling into debt.

There are strict protocols that creditors should follow when trying to recover the payment of unpaid bills and costs. It may be that some alleged debts are disputed and if so — where an agreement cannot be reached between the creditor and the debtor — this may result in a claim being brought to recover the alleged debt.


When can a statutory demand be used?

A statutory demand can be used where there is an undisputed debt. If the debtor is an individual, then the value of the debt must be at least £5,000. If the debtor is a company, then the value needs only to be at least £750.


Can a statutory demand be served if the debt is disputed?

A statutory demand should only be served on a debtor where the debt is not disputed. Sometimes, if a debtor has been unresponsive to any previous requests for payment, serving a statutory demand may result in the debtor responding and raising a dispute that the creditor was unaware of.

In this instance, the parties can then look to resolve the dispute. A dispute may mean that the demand needs to be withdrawn. If the dispute cannot be resolved, it may be necessary to ask the courts to intervene.


Must I take action upon receiving a statutory demand?

Once a statutory demand has been served, it is important to act quickly — the debtor is required to make the payment within 21 days. Failure to do so may result in the non-payment being used as evidence to support a bankruptcy petition (for an individual) or winding-up petition (for a company).

To try and avoid bankruptcy or insolvency, communicating with the creditor at an early stage is key.


What to do after receiving a statutory demand — five key steps
  1. Read through the demand so that you know what it relates to.
  1. If you agree that the debt is due and are able to pay it, it should be paid within 21 days.
  1. If you agree that the debt is due but you are unable to pay it within 21 days, you should contact the person or company that served the demand. You may be able to negotiate payment terms over a period of time. This will deter any petition being made for your bankruptcy or your company’s insolvency.
  1. If you do not agree that the debt is due, you should contact the person or company that served the demand and set out why the debt is disputed. You may be able to obtain an undertaking (a promise) from the creditor to not apply for a bankruptcy or winding-up petition without giving further notice to you or your company. This will allow additional time to try and resolve any disputes without the immediate risk of bankruptcy or insolvency. Alternatively, the creditor may agree to withdraw the statutory demand.
  1. If, as an individual, you do not agree that the debt is due, you may (subject to certain restrictions) make an application to the court to set the demand aside. This would mean asking the court to treat the demand as though it was never served in the first place. This application must be made within 18 days of the demand being served. Once the application is made, the creditor is unable to petition for bankruptcy or insolvency until the court has given a judgment to allow it. This option is not available to a company.


Talk to us

Our litigation team understands that the risk of bankruptcy or insolvency can be a stressful and worrying time. In a recent case, our team was pleased to secure the withdrawal of a disputed statutory demand for a client by setting out to the creditor why the monies being claimed were not in fact due.

It is important to act quickly if you or your company are served with a statutory demand. If you do not dispute the debt but are unable to pay it immediately, our team is on-hand to help you negotiate a repayment plan. If the debt is disputed (whether fully or in-part), our team can advise you on your options and provide a considered way forward, enabling you to make a fully informed decision.

Get in touch with me at or 0161 836 8935, or our Head of Litigation and Regulatory Jeff Lewis at or 0161 836 8872, to find out more.

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