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Statutory Demand - Setting Aside

Setting Aside Statutory Demands

If you have received a statutory demand that you are unable or unwilling to pay, we can help. Statutory demands are often used by businesses as a means of forcing debtors to make payment. Where a statutory demand has been issued, you have only 21 days to make payment or face bankruptcy or winding up proceedings. Statutory demands are serious business, and if you have been issued with a statutory demand that you wish to have set aside, you need expert advice.

What does it mean to set aside a statutory demand?

If you have been issued a statutory demand that you cannot pay, or do not wish to pay, you can take action and make an application to have the demand cancelled. This is known as setting aside a statutory demand.

When can I apply to set aside a statutory demand?

You can apply to the court to have the demand set aside, so long as you do so within 18 days of the demand being issued. Under certain circumstances, the court may consider your application outside of this time limit so long as the creditor involved has not already asked for a bankruptcy petition to be issued.

Where you have genuine reasons for not paying the debt outlined in the statutory demand, the court will consider setting it aside. There is no guarantee that your application will be successful, however, we can ensure your application clearly and fully sets out your reasons, giving you the best possible chance of having the demand set aside. The court may consider setting aside the demand where:

  • 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?

There is no requirement that a lawyer issue a statutory demand, anyone can do so. However, there is a strict process that must be followed, and as those issuing the demands are often not lawyers, there are frequent errors in making statutory demands. Our team will be able to advise you if your statutory demand has been issued incorrectly, but it is important that you contact us as soon as possible

What is the timeframe for applying to have a demand set aside?

You will have 18 days from the date you receive the statutory demand to contest it. Again, if you wish to contest the demand it is imperative that you take caution as soon as possible.

How do I challenge a statutory demand?

It is possible to challenge a statutory demand without the assistance of a solicitor, however, to give yourself or your business the best chance of success, we recommend enlisting expert help. Our team will assist you in preparing your application, gathering evidence and explaining fully your reasons for contesting the demand. We may also be able to negotiate a settlement with the creditor that is suitable for you.

Where do I apply?

You must make your application to the court where a bankruptcy petition would be heard if you were to apply for your own bankruptcy. Normally, this will be the county court in the area where you live. The statutory demand itself should contain details of the correct court to make your application to.

If the statutory demand is in relation to a business debt, 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’). 

How do I apply?

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 for an Injunction 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. 

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 solicitor such as ourselves, rather than doing it yourself.

Do I have to go to court?

You must attend a hearing on the date set by the court. If you fail to attend the hearing, the court will be required to dismiss your application.

What happens next?

If your application is dismissed, your creditor may immediately apply to make you bankrupt. You may also be liable for court costs.

If your application is successful, the statutory demand will be cancelled. However, depending on the circumstances of your case, there may be a requirement to negotiate a settlement with your creditor.

How Selachii Can Help

Selachii is a dynamic litigation and dispute resolution law firm based in Kensington, London. Whether you are a small start-up business or a large multinational, we can take on your dispute and work to resolve it as quickly as possible so you can concentrate on your day-to-day business.

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. Our team will help build evidence in your case and offer clear and straightforward advice as to how you should proceed.

We don’t believe in simply handing out one-size-fits-all solutions to problems. We will focus on your specific circumstances before working out the best and most cost-effective way of helping you achieve your aims.

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