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Set aside statutory demand - act now!

Statutory demands can be a useful way for a business to collect unpaid debts. Rather than sending round debt collectors to try and get a debt repaid, which may not always be successful, the issuing of a statutory demand to an individual or company is serious business.


This is because if the debt isn’t repaid within 21 days, a court order can issue bankruptcy proceedings (for personal debt) or apply to have your business wound up(for company debt).
 
Therefore, it is imperative that if you have received a statutory demand that you are unwilling or unable to pay, that you take action and apply to have the demand cancelled.
 
This is called setting aside a statutory demand.
 
While there is no guarantee that your application to have the demand set aside will be successful, if you have a genuine reason for not repaying the debt, then the court can agree to cancel the statutory demand.
 
What reasons can I apply to have the statutory demand set aside?
 
Reasons that a court will consider setting aside a statutory demand typically may include:
• you have a genuine dispute with your creditor about the debt
• the amount you owe is less than £5,000 if you are an individual, or £750 if you are a limited company
• the demand has been issued in error
• your creditor has some of your assets
• you have been making regular, monthly repayments on the debt
• you are owed money by the creditor
• the debt is over 6 years old
• the statutory demand hasn't been issued correctly – for example, they failed to use the correct forms and/or required method of serving the demand.


How do I know if the demand has been issued incorrectly?
 
Anyone can issue a statutory demand, you don’t need a lawyer to do so. This typically makes it fairly easy for businesses to collect unpaid debts from other businesses and individuals. Certainly, the threat of court action resulting in your company being wound up or you personally facing bankruptcy may often be enough to prompt payment – even if you believe you have good reason not to pay the debt.
 
There are processes and procedures that must be followed with the issue of a statutory demand. And because anyone can issue a demand, there means there is room for error if that person isn’t a solicitor or lawyer.
 
That is why seeking advice from a solicitor as soon as possible makes sense.
 
What is the timeframe for applying to have a demand set aside?
 
Unless you live abroad, where the timeframes differ, you have 18 days from the date you receive the demand to contest it, so it is imperative that you take action as soon as possible.
 
How do I challenge a statutory demand?
 
You can challenge a statutory demand yourself or you can use the services of a solicitor such as ourselves. We will work with you to gather the evidence needed to contest the statutory demand or to achieve a negotiated settlement with the creditor.
 
If you want to go down the do it yourself route, then
 
• if the statutory demand is against you for a personal debt, you can ask to have a statutory demand set aside by completing two forms (available on the Government website) and taking three copies of each to the court in person, or by posting them to the court named on your statutory demand. A date for a hearing will be set and you will need to attend court.​
 
• if the statutory demand is against your company for a business debt, you can apply to the court to stop your creditors from applying to wind up your company. You must do this within 21 days of getting the statutory demand and you will need to complete a form.
 
Which court you apply to depends on how much money shareholders have paid into your company by buying shares (this is known as ‘paid up share capital’). You can read more here.
 
As with a personal debt, when applying to cancel a statutory demand, a date for a hearing will be set and you will need to attend court.
 
Because challenging a statutory demand is so important, we recommend using the services of a specialist solicitorsuch as ourselves, rather than doing it yourself.
 
Don’t delay!
 
Time is of the essence when you receive a statutory demand and that is why we recommend you get in touch today to see how we can help.
 
In the meantime, do remember that the issue of a statutory demand does not necessarily mean that the debt is due or that the demand has been properly issued – there may be several reasons why we can apply to have the statutory demand set aside.

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