How do I reply to a statutory demand?
There are three responses to a statutory demand:
Comply with the statutory demand
This means either paying it off, or making an arrangement to pay it. There are three ways you could comply with the statutory demand:
- Pay off the debt in full
- Make an agreement with the creditor to pay the debt off in instalments.
- Agree with the creditor to secure the debt against your home or another asset – we strongly recommend you get legal advice before considering this
Although if you plan to comply with the statutory demand, you’ve got 21 days to do this before your creditor could start action to bankrupt you.
Apply to set aside the statutory demand
If you think the statutory demand is wrong you can apply to the court to have it cancelled or ‘set aside’.
If you live in England or Wales, you need to fill in two forms explaining the reasons why you think the demand is wrong:
If you live in Northern Ireland you need to fill in these two forms:
The forms will need to be submitted to the High Court, along with a copy of the statutory demand if you still have it.
The reasons for applying to set aside a statutory demand could include:
- The debt is actually below the bankruptcy limit of £5,000
- You’re in the middle of disputing the debt, for example you currently have a case being investigated by an ombudsman
- The debt is statute barred
You can’t get a statutory demand set aside because of minor errors in the forms, because you’re in financial difficulties, or because you think the demand is unfair.
If you want to apply to set aside the statutory demand, you need to complete the forms and send copies to the court and to the creditor who sent you the demand. You have 18 days to do this. Contact us for debt help if you plan to do this as it can be complicated.
If you do nothing, your creditor may go on to make you bankrupt. They’ve got four months after the statutory demand to apply to the court for a bankruptcy petition.
If you don’t want to go bankrupt, then doing nothing is a bad idea. It’s not guaranteed that your creditor will start to make you bankrupt after the statutory demand, but it’s a significant risk. The effects of bankruptcy can be very serious, so don’t take any chances.
However, if you do want to go bankrupt, then doing nothing after a statutory demand might be a good idea – if your creditor goes on to make you bankrupt they’ll have to pay the costs of this instead of you paying.