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Have you received a statutory demand?

Posted 24 July 2016

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Find out what this means and how you could deal with it.

If you’ve been missing payments and ignoring contact from a creditor, it’s possible they’ll look to try and make you bankrupt. To do this, they’ll need to send you a statutory demand.

This can be isolating and you might not know which way to turn. Don’t worry – it’s normal to feel stressed in this situation, but you don’t need to panic. It’s important that you know that help is available and you don’t have to deal with the situation on your own.

We’ll take you through what a statutory demand is, what you can do if you get one and how you can get back in control of your debts.


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What it means

A statutory demand is the first official sign you’ll get from a creditor if they’re taking steps to make you bankrupt. But that doesn’t mean it will come out of the blue. You’ll have missed payments and you might have ignored contact from your creditor. As a result, they might decide to try and make you bankrupt so they can get back some or all of what you owe them.

We know you might not want to deal with your creditors and you might be tempted to just hope the statutory demand will go away. But when you get the demand, you’ll have 21 days to respond to it. If you don’t do this, your creditor can apply to make you bankrupt. That’s why it’s really important to respond to the notice.

What are your options?

Getting a statutory demand doesn’t guarantee you’ll be made bankrupt. But it does mean that if you ignore the notice, your creditor is likely to petition for your bankruptcy – but there are ways to deal with the situation.

If you can afford to repay the debt in full, the best way to deal with a statutory demand is to pay it off. Get in touch with the creditor and let them know when you’ll repay the debt – this should be within the 21 days set out in the statutory demand.

You might not have the money to pay the debt off in full but if you can pay something towards it, offer to repay in instalments. Your creditor doesn’t have to accept this but they may decide they’d be better off letting you repay it over a longer term. This way, they’ll get back everything you owe them – they probably wouldn’t get this with bankruptcy. And once you owe less than £5,000 to the creditor, they can’t force you into bankruptcy.

If you’re a homeowner, you might even be able to secure the debt against your home. This is a voluntary charge and it means that when you sell your property, your creditor will take the money needed to clear the debt from whatever you get out of the sale. But it also means you could lose your home if you don’t keep up to date with repayments – so make sure you always get advice from a debt expert before you do this.

Can you challenge it?

Yes, you can certainly challenge statutory demands – under certain circumstances. If you don’t think the creditor has issued the statutory demand properly, you owe them less than £5,000 or you have another genuine dispute about the debt, you can apply to get the notice set aside.

You’ll need to apply to the court to do this and you’ll have 18 days from when you first got the demand. You’ll have some court forms to fill in and you’ll have to go to a hearing where the court will decide whether the statutory demand should be set aside or not. It’s a good idea to get some advice before you do this – you can speak to Citizens Advice or a debt expert.

Seeking help

You might just decide to accept the statutory demand and enter bankruptcy. This could be the best option for you if you’re insolvent, you can’t repay your debts in a reasonable time and you don’t see your situation improving any time soon. Bankruptcy means you could be debt free in as little as 12 months, though if you can afford to pay anything towards your debts, you could have to do this for up to three years.

But bankruptcy isn’t the only debt solution – an Individual Voluntary Arrangement (IVA) might be better for you. If you’re a homeowner, you could lose your home under bankruptcy if there’s equity in it but on an IVA, you might just be able to remortgage and release equity – and this is only necessary in certain circumstances.

You can find free and impartial information from the Money Advice Service or get in touch with our debt advisors using any of the options to the left. If you’ve received a statutory demand, the main thing is to make sure you don’t panic. It’s all about finding out what solution, if any, works best for you, so you can work towards getting back in control of your finances.


by Emily Bancroft

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