If you owe money to a creditor and you are in dispute with them because you haven’t paid back what you owe
then one of the ways that they can take action against you is by issuing a Statutory Demand. It is extremely important to deal with this kind of demand as soon as you can. It is often used by creditors as the move they take before they try to have you declared bankrupt. So, how does a Statutory Demand work?
You can firstly only be sent a demand of this kind if you owe more than £750. This demand gives you a 21 day deadline from the date you received it to respond to the demand and to pay what you owe or state your case. So, what are your options?
If you do not agree with the information that your creditor has listed on your Statutory Demand
- If you do owe the money that the creditor is claiming then you can try and come to an agreement with them to pay back what you owe if you cannot pay it in full. They may, for example, be wiling to look at a series of reduced payments as an alternative to an instant full payment.
- If you want to pay back the money once and for all but cannot afford to do so then you might be better off trying to raise the cash to sort out this debt or to take an alternative debt management route. You could, for example, take out a debt consolidation loan or an IVA to pre-empt the bankruptcy proceeding.
- If you cannot pay off all of your debt or get the creditor to agree to a repayment schedule then you can try to pay off enough to get the debt below £750. Once you go below this limit they can’t have you made bankrupt.
- Your creditor may agree to have you put a Charge on your home for their debt if your current debt is unsecured. This would turn it into a secured debt which would show them that they can get their money back next time you sell your property. Make sure, if you do this, that you put in conditions that prevent them from immediately forcing you to sell the property to get the money.
then you can start a dispute to have the demand set aside. The court will stop the time limit of 21 days on your demand if you do this for the time being. You will, however, need to do this within 18 days of the receipt of your demand using forms 6.4 and 6.5 and a sworn statement. Reasons that are acceptable here include:
- Either all of what you owe (or an unsecured element of it) totals less than £750.
- You have a claim against your creditor yourself (i.e. they also owe you money) that is the same/more than the sum that you owe them.
- The debt in question is a secured debt which uses as security property that has a value equal to or greater than the debt itself.
- The actual debt itself is in dispute.
Do remember that a lot of creditors will use a Statutory Demand with its threat of bankruptcy as a last resort with their debtors. Many won’t even go down the bankruptcy route as they know that this demand will usually make people pay. Even so, it is important to treat a Statutory Demand as a priority to make sure that this doesn’t happen to you.