Debt Solicitors

A statutory demand is a warning given to someone that they have 21 days in which to pay a debt, following which period proceedings for bankruptcy may ensue. This is rather like a warning shot across the bows as far as a creditor and their solicitor are concerned and is often very effective. The average debtor will be eager to pay up once they have been familiarised with the possible consequences of not doing so. In fact, statutory demands are so effective that in 99 percent of all such cases a bankruptcy petition never has to be issued following the issue of the demand.

Another tactic that is commonly used is for the creditor to link the issue of a statutory demand to various types of information dissemination, such as disclosure of the fact to banks, public interest groups and credit reference agencies, which can effectively ruin the debtor in question.

So a statutory demand constitutes the first step on the road to bankruptcy proceedings against an individual and it does not involve going to court. An application for the statutory demand to be set aside can be made if its target disputes its validity. Bankruptcy cases can be halted by the court should there be a dispute concerning the amounts involved. In fact it is quite easy for a debtor to have a demand set aside and effectively turn the tables by claiming costs from the debtor. A statutory demand should be seen for what it is, a bluffing technique that is employed to scare a debtor into paying moneys owed and this fact becomes readily apparent if a bankruptcy petition does not follow.

Nevertheless, statutory demands are a powerful tool for the creditor and their legal representatives, for a number of good reasons. The procedure is very simple to implement and you need only complete a simple form to issue one. It can be sent by recorded post, rather than special delivery and a solicitor is not needed to issue it. Though there are no expensive court filing fees involved, the debtor is likely to assume that a solicitor has been instructed to act and will often pay immediately on receipt of the demand.

Statutory demands are used to persuade a debtor to pay, either in full or in part and also to get them to perhaps offer property as security or to pay in instalments.

A statutory demand should be taken seriously if the person issuing it has the resources to carry through with the bankruptcy threat or is angry enough to want to cause bankruptcy. It is also a real threat if the debtor has assets, such as a house, which will be at risk, as the creditor will know this and pursue the case more energetically. Anyone with a reputation to protect should also be wary of having a statutory demand issued against them.

For more information on statutory demands, contact debt solicitors such as Duncan Lewis.