Tax and Insolvency Litigation Solicitor

Statutory Demands and Personal Bankruptcy

Posted In: Commercial Disputes, Insolvency Claims


If you are an individual (as opposed to a company) and you owe money the consequences can be draconian.

You would be well advised to seek advice from a specialist insolvency lawyer at the earliest opportunity.

The person seeking payment (the creditor) may issue a Statutory Demand (or a “Stat Demand” as it is commonly referred to) pursuant to the Insolvency Act 1986, section 268.

If you are served with a Stat Demand you must consider the following –


  • Is the debt disputed?
  • Is there a genuine or serious cross-claim; and
  • Can you pay within 21 days?


At that stage a full review of all your debts should be undertaken. Is this just the tip of the iceberg? Are more creditors about to get serious with you? Are you prepared to be bankrupt?

Alternatively, the alleged debt may be disputed. You may have a genuine cross-claim.

In such circumstances you may well be advised to file an Application to Set Aside the Statutory Demand. A word of warning: if it is not done within 21 days of the date of the Demand a petition for your bankruptcy could be presented. You and your specialist insolvency solicitors will have to work quickly to file the appropriate papers in court.

The ultra-cautious person may even offer up some kind of security whilst the dispute is worked out.

Normally, giving notice to the creditor of a genuine dispute or a cross-claim is sufficient for the creditor to withdraw the Demand. If it is not withdrawn you should be prepared to file the relevant application at Court before the end of the 21 days period.

If after the relevant 21 days is up, the creditor does not withdraw the demand, but does not act upon it, you can be placed into a difficult position. In short, there will be a presumption of insolvency. Consequently, if you take on further credit, losses subsequently arise and you are later declared a bankrupt, you may face the prospect of a Bankruptcy Restriction Order (“BRO”) which can have very severe consequences.

Therefore, if you are presented with a Statutory Demand, for a personal debt in excess of £5,000, seek the advice of a specialist bankruptcy lawyer without delay.


To discuss your options when faced with a statutory demand contact specialist bankruptcy solicitor Stephen Chinnery  by email or on 07460 005 769 to discuss further.

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To further discuss any area of Commercial Disputes or Insolvency Claims with an experienced lawyer please contact us or call us on 07460 005 769.

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