Posted on 13th January 2022 at 13:22
A statutory demand is a warning letter served by a creditor to a debtor (individual or a company) stating that if he or they do not pay his or their debt in full or make another arrangement acceptable to him within 21 days, he may start court proceedings to make him bankrupt. Anyone who is owed money can make a statutory demand by themselves without engaging a lawyer provided the debt exceeds £500 in respect of an individual debtor and £ 750 in respect of the company. If the debt is over 6 years old, one cannot make a statutory demand but will have to take legal action. An individual or company which owes money and has received a statutory demand will have 21 days to either pay the debt, reach an agreement to pay, or apply in court within 18 days to have the statutory demand set aside (in case of the debtor is an individual) or seek an injunction to restrain the creditor from presenting a petition for bankruptcy (in case debtor is a company) otherwise the creditor can use statutory demand as evidence to present a petition to the court for a bankruptcy order.
If an individual or sole trader owes you money, then statutory demand should be brought to the attention of the concerned individual or a sole trader by serving it personally and obtaining proper acknowledgement of receipt. One can also utilise the services of a process server.
If a registered limited company owes you money, then the statutory demand should be delivered personally at its registered office under proper acknowledgement of receipt. One can also send it by registered post and it will be properly served if the company acknowledges it by signing the post office receipt.
If an unregistered company owes you money, then statutory demand could be served by leaving it at the company’s main place of business or delivering it to the company secretary, manager, or principal officer of the company obtaining proper acknowledgement of receipt.
The creditor must keep a record of the statutory demand and its acknowledgement of receipt mentioning the time and date of receipt. This information/document will be required to start bankruptcy proceedings against the debtor if your demand is ignored. The creditor will be required to apply for bankruptcy proceedings within four months if the debtor fails to pay the debt within 21 days of a statutory demand.
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