Worried about CCJs? You need to know about this letter
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Receiving a statutory demand can be scary. Make sure you know what your options are if you receive a statutory demand from one of your lenders.
Worried about a creditor trying to make you bankrupt? Then it’s key that you understand about statutory demands and what you can do about them.
First, it’s important to remember that a lender can never just make you bankrupt without warning. There’s a process they must follow and one of the steps in this process is to send you a statutory demand as a warning of their intention to make you bankrupt. A statutory demand tells you that a creditor may try and make you bankrupt if you do not take action within 18 or 21 days, depending on how you want to respond to the demand.
Important point – a lender can only make you bankrupt if you owe them more than £5,000. So, if your debt is less than this, and they’re threatening bankruptcy, you should certainly challenge it.
If you agree…
There are three ways that you can deal with a statutory demand:
1. pay the debt
2. come to another payment arrangement with your creditor
3. get the statutory demand cancelled
If you agree that you owe the money, but you’re having trouble paying it back, you should get in touch with the creditor as soon as possible and explain your situation, if you haven’t already done this. They may be able to arrange a payment holiday or reduce the monthly payments that you need to make. Remember, if you reduce your debt to under £5,000 the lender will no longer have the option to make you bankrupt.
It’s probably a good idea to have a good look at your finances to see what you can realistically afford to pay each month. And you may want to speak to us before you speak to the creditor, so that you can show how you are dealing with your debts.
If you disagree…
If you don’t agree with what you owe, you can ask the court to set the statutory demand aside. If you intend to dispute, you’ll need to submit three copies of the application to set aside a statutory demand 6.4 form, and the witness statement in support of an application to set aside a statutory demand 6.5 form within 18 days of receiving the demand. And once you’ve applied for the demand to be set aside, the 21 day time period you have to respond in will stop until the decision has been made. The first form, 6.4 Application to Set Aside a Statutory Demand, is the request, and the second, 6.5 Witness Statement in Support of Application to Set Aside Statutory Demand, is the witness statement in support of your request.
You will need to state when the statutory demand was served (given) to you, explain your grounds for disputing it and include a copy of the demand itself.
Bear in mind that it will be almost impossible to set aside a statutory demand for an amount that you already have a CCJ for. This is because the CCJ is already considered to be proof that you owe the amount. So, you may have it set aside on other grounds, but not for dispute over the amount.
What happens after the statutory demand?
If the time limit to respond has run out, or your application to have it set aside has failed, your lender is now able to make you bankrupt.
If they do attempt to bankrupt you, you’ll be notified by letter. The letter will also detail the date of a hearing – this is when the court will decide whether to make you bankrupt. Bankruptcy at this stage is not certain – you can defend your case by sending this form to the court where the hearing will be held. You can argue that you can pay your debts, you have a realistic payment plan in mind or that you haven’t missed any CCJ payments.
If you’re wondering whether bankruptcy might be the right debt solution for you, we’d advise that you take a look at our bankruptcy page. There could be other alternatives that could be better for you, have a look at our debt solutions page to explore your options. And if you have any questions, don’t hesitate to get in touch using one of the options to the left.
by Christine WalshBack to blog home