There are many creditors who are issuing Statutory Demands (SD’s) inappropriately i.e. as a threat only and have no intention of going the whole route of making someone bankrupt. I have therefore set out a step by step guide to defending yourself from these types of threats.
Now in my job as a Process Server, I serve a lot of SD’s and people generally have a misconception that they can avoid or evade being served. This misconception clearly comes from the influence of American movies where you see the process server attempting to serve the person who refuses to receive it in their hands.
In England, it is generally impossible to evade service of a SD and if a person is being evasive then we simply send them a letter of appointment via 1st class post and serve them through alternate service i.e. by putting the SD through the person’s door or even leaving somewhere and informing the person of where it is and what is on it. Alternate service is just that, some other way of serving the document and I have known documents being served by publishing it in the local papers or taking out an advert. Once the SD is served, generally a statement of service is written and signed by the Process Server
So what is an Statutory Demand?
A Statutory Demand is the first step to bankruptcy against an individual and this is prepared and served without any court involvement. A statutory demand can be served as soon as the debt is due and a judgement is not necessary. The link here is a PDF of a Debt for Liquidated Sum Payable Immediately and also Debt for Liquidated Sum Payable Immediately Following a Judgment or Order of the Court and Debt Payable at Future Date
So that’s what they look like. Lets look at the common strategies for dealing with them.
How to reduce the risk of bankruptcy following a statutory demand?
(a) To avoid bankruptcy reduce the debt to less than £750.
(b) Offer to pay the debt by instalments.
(c) Make a reasonable offer to settle the debt.
(d) Apply to have the Statutory Demand set aside on the grounds that the debt is in dispute.
After the period of 21 day from the statutory demand being served the person issuing the statutory demand may begin the process that petitions the person’s bankruptcy.
To successfully get a statutory demand set aside one or more of the following must be satisfied:-
* The amount stated on the statutory demand is disputed.
* The person issuing the statutory demand also owes money. This is called a counterclaim.
* The person issuing the statutory demand is holding security that equals or exceeds the amount owing.
* The demand was issued in error.
* The amount owing is less than £750
* Execution has been stayed on a judgement debt.
* The debtor is complying with an instalment order. This would mean the debt is not actually owed as it is being paid back.
* The creditor failed to comply with the rules and prejudiced the debtor in the process.
Step 1 – So the best way of dealing with an SD is to accept the SD because it has lots of important information that you are going to need.
Step 2 – Read it carefully and decide if the particulars are correct. The debt has to be over £750 and not in dispute.
Step 3 – Write to the person named in part B of the SD informing him/her that the debt is in dispute and say why.
Step 4 – Print out an Application to Set Aside a Statutory Demand and an Affidavit in Support of Application to Set Aside Statutory Demand which you must fill in and present at the court within 18 days of being served.
I would have a read of this thread over at the Consumer Action Group which has some very sensible advice too.
And that’s the process. If you have any doubts about how to do this then I would strongly recommend consulting a Solicitor.