Would you know what to do if you were served with a Statutory Demand? I’m sure it won’t happen to you, but would you know what to do if it did?
Don’t bury your head in the sand, the clock is ticking. If you don’t apply to set it aside within 18 days of it being served on you, or pay it within 21 days, whoever served it on you can petition for your bankruptcy.
The first question you should ask yourself is if you owe the money. Even if you do, there are 4 more questions you should consider:
- Have you given security for it?
- Do you have a counterclaim, set-off or cross demand?
- Do you genuinely dispute the debt?
- Are there any procedural flaws in the Statutory Demand that would satisfy a court that it should be set aside?
If you can not answer positively to any of those questions, the best advice must be to contact whoever served it on you to discuss repayment. But if you can, I would strongly advise you to apply to set it aside. Otherwise your personal insolvency is at risk.
Unfortunately the inability to pay is not sufficient reason to apply to set it aside. The very nature of an undisputed Statutory Demand is to establish if you are able to pay the debt. If you are not, that is sufficient to enable a Bankruptcy Petition to be served on you because that is deemed to show that you are fundamentally insolvent.
However, applying to set aside a Statutory Demand is more straightforward than you might think. It is one of the only Court applications that I can think of that doesn’t require an application fee. And believe me, a free Court application is a rare beast.
There is a standard form to use, making it clear what information the Court needs to be told. There is even a standard supporting Witness Statement template. For once the Court makes it as easy as possible. Once those have been completed three copies must be given to the Court within the 18 days, and a hearing date will be set – usually for a few weeks time.
Quite often the Judge will deal with the application at that hearing. If there is a genuine issue why the debt is disputed, the Statutory Demand will usually be set aside. The actual issue won’t be decided, all the Judge will need to have proved is that there is one.
If the application is not straightforward the Court will give directions for whoever served the Statutory Demand on you to serve evidence in response to yours, and then re-list the matter for a longer hearing in order to make a decision. The Court is only really interested in whether there is an undisputed debt. Realistically there are only two outcomes – the Statutory Demand will be set aside, or your application will be dismissed. If it is dismissed, whoever served it on you will most likely be able to present a petition for your bankruptcy.
By Lucy Tarrant
