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Statutory Demands


With the recent increase in court fees Statutory Demands are becoming more and more frequently used when recovering debts from individuals or companies. The threat of what might happen once a statutory demand is served is so great that the debtor should take the service of the demand very seriously and deal with it promptly.

A statutory demand is a formal demand for money and it is the first step in insolvency proceedings against an individual or company and should only be used if there is a contractual right for payment and the money owed is not disputed.

In order to serve a statutory demand the debt against an individual must be over £5000.00 or for a company over £750.00.

The demand requires the debtor to pay the amount in the demand within 21 days. If payment is not made within that period then insolvency proceedings can be issued against the debtor.

The advantage of using a statutory demand over normal court proceedings is speed, impact and cost and is more frequently very highly effective.

Before considering whether or not to issue a statutory demand you must be prepared to follow through with the issuing of a bankruptcy petition if you do not get any response.

If the demand does not prompt payment, then a petition, whilst more expensive, is likely to get a better result with its imminent threat of bankruptcy or winding up.

Perhaps most importantly, you are trying to persuade the debtor to pay. Ultimately, you do not want a bankruptcy or a winding up order made against the debtor. If such an order is made, then the debtor’s assets will be sold and the proceeds on sale used to pay off the debtor’s debts and the costs of obtaining the bankruptcy order or winding up order.

The debts and costs are paid in an order of priority set out by Insolvency legislation. You may therefore find yourself in a position where you have incurred significant expense to obtain the bankruptcy order or winding up order merely to become one of the many creditors of the debtor, waiting to see what can be realised from the debtor’s assets. Usually, little, if anything, is recovered in such circumstances. Therefore, it is always important to do some background checking on whether or not that debtor has the means to pay before considering the insolvency option.

That all said things can go wrong and if there is any doubt that the debtor doesn’t have the means to pay, the debt is disputed or there is the possibility of challenging the demand then it is not the right option for you.

If you are looking to issue and serve a statutory demand on somebody or have had one served on you get in touch to discuss.