A Statutory Demand is a formal request for payment and it gives the debtor 21 days warning to pay the debt. After 21 days it can be followed by a bankruptcy petition.
A Stat Demand can be served as soon as the debt is due and does not require a County Court Judgment (CCJ) to be issued first and it can be served without any court involvement. It can be fairly easy for the debtor to get the Stat Demand “set aside” if there is any dispute the court will halt the bankruptcy. This can result in an order for costs being made against the petitioning creditor.
The majority of Stat Demands that are issued are done so for “scare tactics” thus being because the average debtor will normally be so scared having received on they will pay up. If a bankruptcy petition does not follow the 21 days notice then this would become apparent.
It is very easy for the creditor to issue a Stat Demand, a simple form to complete and the papers can be served by recorded post. There is no need for personal delivery or a solicitor to be involved.
Receiving a Stat Demand can be very scary – especially if the debtor has assets such as a house or their reputation / job would be at risk if they were made bankrupt. There are ways that the risk of bankruptcy can be reduced such as:-
· The debt is reduced below £750
· The debtor offers to make payments to clear the debt by instalment
· The debtor applies to have the Statutory Demand set aside
It is recommended that advice be sought if a Statutory Demand is received, every ones circumstances differ. This explanation is for information purposes only.
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