Applications to set aside statutory demands

A statutory demand is a formal written demand made by a creditor. It is “statutory” because it is made under a statute – the Insolvency Act 1986. It will make clear that they will seek to initiate bankruptcy procedures against you unless the debt is paid in full or an alternative arrangement made.

If you have been served with a statutory demand, you have 18 days from receipt to apply to the court for it to be set aside. You must apply to the court listed on the demand, completing the relevant forms. The court may allow an application beyond this time limit if the creditor hasn’t petitioned for bankruptcy against you.

Grounds for an application for a statutory demand to be set aside are:

  • the debt is genuinely disputed
  • you believe there is a counterclaim against the creditor amounting to at least the same sum
  • the statutory demand hasn’t been issued correctly
  • the debt amounts to less than £5000
  • you have a legitimate defence, such as the claim against you being out of time

A date will be set for the hearing which you must attend. If your application is dismissed, you may have to pay court costs and your creditor can continue with their bankruptcy action against you.

If you are successful, the statutory demand will be set aside or cancelled. However, this may not be the end of the matter, and your creditor could still issue proceedings in the civil courts to recover the debt.