It can be critical to make the right decision between serving a statutory demand or issuing a more traditional Claim Form in the county court. Get it wrong and it could lead to a heavy costs penalty. Our experts can help
When to use a statutory demand
A statutory demand is essentially an insolvency based process. It is used in circumstances where the debtor is unable to pay its debts and is to be deemed to be insolvent.
- it should however only also be used in circumstances where the debt claimed is undisputed;
- if the debt is subject to a dispute, then the matter should be litigated out in the normal court process. This is because ultimately, if a debt is disputed then the court will want to listen to evidence from individuals at a trial and that opportunity simply does not exist in the statutory demand process.
A creditor should always consider using a statutory demand as part of debt collection process if the debt is undisputed. The advantages over the small claims, county court or high court can be significant
- this is because the normal court system is much slower and can be very time consuming;
- it can also be quite costly if the debtor tries to defend the claim;
- there is the possibility of cutting that all out by using a statutory demand which in itself is also a relatively cheap process and can be less than the court issue fee in normal court claims.
However – recent changes to the rules due to Covid have made the position even more complex. Previously winding up petitions could be issued for any debt over £750. Now it is £10,000 (at least until the end of March 2022). This has a knock on effect on when to use statutory demands – and how effective they are against companies on debts below £10,000. And for individuals – bankruptcy petitions can only be issued for debts above £5,000. So it is vital to take proper advice and avoid wasting time, effort and money.
Make sure you get it right – call us today
Legal advice is recommended to ensure that your case is right for a statutory demand rather than a normal small claims court, county court or high court case. At FWJ we have a team of expert statutory demand lawyers who can assist.