Understanding Statutory Demands for Debt Recovery

May 4, 2024 - Reading time: 4 minutes

A statutory demand serves as an official notice issued by a creditor that outlines a demand for payment. It warns the debtor of impending legal action to declare bankruptcy if the owed sum is not settled or if an alternative agreement acceptable to the creditor is not reached.

Upon receiving a statutory demand, the debtor is given a 21-day window to either pay the outstanding debt in full or to negotiate a satisfactory arrangement with the creditor.

Situations Warranting a Statutory Demand

Statutory demands can be employed by anyone owed money, including landlords not receiving timely rent payments or individuals who have extended loans that have not been repaid within the agreed period. Certain conditions must be satisfied to issue a statutory demand.

For individuals, such a demand is applicable only if the debt exceeds £5,000. For instance, you cannot issue a statutory demand to a sibling who owes you £3,000.

Conversely, if you are owed more than £750 from a company, perhaps due to inadequate services for which you paid in excess of £750 or for any other reason, then you are entitled to issue a statutory demand to the company.

Appropriateness of Issuing a Statutory Demand

You may issue a statutory demand for payment against either an individual or a company if you are the creditor. It is not necessary to engage a lawyer to proceed with a statutory demand.

Typically, if a debt has been outstanding for over six years, then issuing a statutory demand is not possible.

Required Forms for Statutory Demands

Serving a statutory demand involves the completion of specific forms tailored to the nature of the debt:

• Debts currently due
• Debts presently owed as a result of a judgment or court order
• Debts that will become payable in the future

The required forms are available for download on the GOV.UK website.

Procedure for Delivering a Statutory Demand

Methods of serving a statutory demand may vary:

For individuals: Direct personal delivery or engagement of a professional like Vilcol to serve the documents.

For companies: Leaving the documents at their official address or utilisation of a process server to deliver it directly to a director, company secretary, manager, or principal officer.

Maintaining records of the service of the statutory demand, including the recipient's acknowledgement, is crucial.

Keep evidence regarding:

• The exact date and time of service, which could be a postal receipt or confirmation from a process server.
• Acknowledgement from the debtor of the statutory demand.

These records are vital should the debtor ignore the statutory demand. Ignorance past the 21-day limit allows you to initiate bankruptcy procedures against individuals owing £5,000 or more, or company insolvency processes for companies in debt of £750 or more.

Utilising Process Servers for Statutory Demands

While self-service of statutory demands is possible, it's often best to hire professional process servers. These specialists are adept at delivering various legal documents, including statutory demands, divorce papers, and other court-requiring notices.

Process servers are trained to handle potentially volatile situations sensitively and professionally, ensuring delivery is completed safely.

They also provide essential documentation of delivery, lending credibility to your claims in court if the debtor fails to respond or if additional legal action is warranted.