Statutory Demands for Bankruptcy
Statutory Demands
A Statutory Demand is a formal document which can be issued to a debtor who has repayment arrears. This is the first step of the legal process a creditor may use to obtain a court order, in an attempt to get you to repay your outstanding debt. If you fail to submit to the threat of a statutory demand the creditor may use the power of the courts to get you to settle the debt or start making reasonable payments.
Statutory Demand Scare Tactics: A statutory demand can often be used as a scare tactic. The Creditors usually know that when someone is unable to repay a particular debt, they chance that they will also have more than one bad debt is rather high. Therefore they adopt the all too common policy of "whomever shouts loudest tends to get paid first". BUT you should always take a Statutory Demand VERY seriously.
Creditors and Debtors Rights
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A creditor has the option to trying to bankrupt you; a statutory demand is the first step of the bankruptcy process.
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The creditor must give reasons as to why they consider the debt viable for bankruptcy i.e., repeatedly late payments, missed and intermittent payments no payments made at all.
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If you are issued with a Statutory Demand you have the option of settling your debt by the following means:
- Weekly Payments
- Monthly Payments
- A lump Sum Payment
- Offer property or assets as security.
Creditors have the option of applying to the local County Courts Within 18 days to stall proceedings under the following circumstances:
- The debt is not payable now
- The amount owed is less than £750
- The amount of money owed is in dispute
- You can and are about to repay the debt
- You have a counterclaim of more than the money owed
- The statutory demand has been issued in error or does not comply with rules
- You are prepared to secure the debt to the creditors satisfaction under the creditors stated terms
Remember: Ignoring or Failing to comply to a Statutory Demand entitles the creditor to present a petition for bankruptcy 21 days from the date of issue.
Failure to respond or comply with a statutory demand is considered proof that the debtor is unable to repay the debt.If you have received a Statutory Demand, or have been threatened with one, then contact an insolvency practitioner.
A Statutory Demand can only made for an unsecured debt or unsecured capital. If the creditor has security on the debt, than that value must be stated so the unsecured portion of the debt is disclosed
How a Statutory Demand is Issued
A Statutory Demand is normally issued in person by the creditor. It can also be posted provided that there is proof that you are aware of the demand being issued.
If the debtor is not contactable, them the demand can be issue by an advertisement, however the creditor requires a court order to do this.