Statutory demands

You should never ignore a statutory demand. If you are an individual and the debt is for £5,000 or more, it could lead to you being made bankrupt. If you own a company and the debt is for £750 or more it could lead to your company being wound up by the High Court.

To avoid this, you must comply with the statutory demand within 21 days. You can either settle the debt or secure it by reaching an agreement for payment. If you dispute it, you should take action to stop the creditor presenting a bankruptcy or winding-up petition.

Disagreeing with a statutory demand

If you are an individual you have 18 days from when the statutory demand is served on you to apply to the High Court for the statutory demand to be set aside - dismissed or cancelled. If the debt is owed by a company you own you should seek legal advice about obtaining an injunction to prevent the company being wound up or placed in administration at the earliest opportunity. 

Application to set aside a statutory demand

If you want to apply to set aside a statutory demand, and the debt is owed by you personally and not by a company you must apply to the High Court using form 6.04 and form 6.05. The application must be accompanied by four copies. The Department for the Economy (DfE) provides links to all insolvency and bankruptcy forms.

From the time you file the application to set aside the statutory demand the deadline for you to comply with it stops running.

Provided an application to set aside the statutory demand is not dismissed immediately, the Court will fix a time for hearing the application, enter this each of the four copies of the application and seal and return them to you. You must then give at least seven days' notice of the hearing to:

• the creditor
• whoever is named in the statutory demand as the person with whom the debtor may enter into communication

by sending them a sealed copy of the application. 

Setting aside a statutory demand (if you owe the debt as an individual)

The High Court has various grounds for setting aside a statutory demand - it may grant an application for setting aside if:

• the debtor appears to have a counter-claim, set-off or cross demand equal to or greater than the debt they owe
• the debt is disputed on grounds the Court considers to be substantial
• it appears that the creditor has not disclosed some security or the Court is satisfied that the value of the security is greater than or equal to the amount claimed
• the Court is satisfied on other grounds that the demand ought to be set aside

If the High Court dismisses your application, the deadline for you to pay or secure the debt will restart from the day your application is dismissed. The Court will make an order authorising the creditor to present a bankruptcy petition either forthwith or from a specified date and you must send a copy of this order to the creditor who served the statutory demand on you.