What to do if you receive a statutory demand ?

If you receive a statutory demand, it is important to act promptly to address the situation. Here are the steps you should consider:

You should seek independent legal advice and at Clodes we have experience of setting aside statutory demands and recovering clients costs.

Review the Demand: Carefully read the statutory demand to understand the details, including the amount claimed, the creditor’s details, and the deadline for responding.

Verify the Debt: Ensure that the debt is valid and that the amount claimed is accurate. Check your records to confirm whether you owe the debt and if the amount is correct.

Consider Grounds for Dispute: Determine if there are any grounds to dispute the demand. Common grounds include:

The debt is not owed.

The amount claimed is incorrect.

The demand was not served properly.

You have a counterclaim or set-off against the creditor.

Respond Promptly: You have 21 days from the date of service to respond to the statutory demand. If you dispute the demand, you should apply to the court to have it set aside within this period.

Apply to Set Aside: If you have grounds to dispute the demand, you can apply to the court to set it aside. This involves completing and filing the appropriate court forms and providing evidence to support your application.

Negotiate with the Creditor: If the debt is valid, consider negotiating with the creditor to reach a settlement or agree on a payment plan. This can prevent further legal action.

Seek Legal Advice: It is advisable to seek legal advice to understand your options and the potential consequences of the statutory demand. A solicitor can help you assess the validity of the demand and assist with any court applications.

Prepare for Possible Bankruptcy Proceedings: If you do not respond to the statutory demand or fail to have it set aside, the creditor may petition for your bankruptcy. It is crucial to address the demand promptly to avoid this outcome.

How are costs dealt with in an Application to set aside a Statutory Demand?

When dealing with costs in respect of an application to set aside a statutory demand, the court has discretion over how costs are awarded. Here are some key considerations:

1. General Rule: The general rule in civil proceedings is that the unsuccessful party will be ordered to pay the costs of the successful party. Therefore, if the application to set aside the statutory demand is successful, the applicant may be awarded their costs.
2. Discretion of the Court: The court has wide discretion in awarding costs and will consider various factors, including the conduct of the parties, whether the application was necessary, and whether the parties acted reasonably in their dealings.
3. Conduct of the Parties: If the creditor acted unreasonably in serving the statutory demand, or if the debtor acted unreasonably in making the application, the court may adjust the costs order accordingly.
4. Proportionality and Reasonableness: The court will assess whether the costs claimed are reasonable and proportionate to the issues at stake. Excessive or unnecessary costs may not be recoverable.
5. Fixed Costs: In some cases, the court may award fixed costs, which are predetermined amounts for certain types of applications.

Call Clodes Solicitors on 02920 765050 for more information about Statutory demands.