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How to recover a debt by using statutory demand

02nd May 2012
By Clark_Taylor in Law
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Statutory demand is a written request from the lender to debtor to return the loan amount. The debtor can be individual or corporations. In Australia, it is known as letter of demand. It is a useful tool to recover the loan amount. You can issue a demand if the debt is not less than £750.It is advisable that you must issue a demand if the owed amount is £1000 or more. The statutory demand must provide the following important info, such as:

  • When repayment must be made

  • How much must be paid

  • To whom the debtor can contact for settling this issue

  • Consequences of ignoring the statutory demand

  • Right to dispute

What is the time period available to debtor?

The debtor within 21 days after receiving the demand must repay the debt or satisfy the debt. Debtor has 18 days (22 days if live abroad) to challenge the demand in the court.

What to do if the debtor does not satisfy the debt?

You can apply for bankruptcy or insolvency if the debtor has not paid you with in defined statutory time period. The debtor can challenge the demand within 18 days after receiving the demand. You can use the statutory demand as evidence in bankruptcy or insolvency proceedings

Can a court set aside the statutory demand?

Yes, court can set aside if there are valid grounds to do so. It is not necessary that demand must be served by the solicitor. You do not need a Solicitor to issue a demand. There is no court fee on the issuance of statutory demand.

On what grounds the debtor can challenge the stator demand

The debtor can apply to set aside the statutory demand if:

  • The amount owed is less than £750

  • Amount owed is disputed or counter claim; or

  • Demand is issued in error

 Is there any time period for expiry of the statutory demand?

No, there is no expiry period for a statutory demand.  However, you must issue a demand for such debt which is not more than six years old.

What are the affect of the demand?

A statutory demand does not ensure the payment. The demand is warning to the debtor to repay the owed amount. The debtor can ask you to settle the issue by agreeing on the monthly or quarterly instalments. It is a threat to the debtor that bankruptcy proceeding can be initiated against him in case of non compliance of the demand.

Can the court stay the statutory demand?

Yes, if the debtor has valid reasons to do so. You must have clean hands before issuing the demand.

What is the prescribed format of the statutory demand form?

 Net Lawman provide you with three versions of form 4.1 under section 123(1)(a) or 222(1)(a) of the Insolvency Act 1986. The format and layout are not laid down, so we are able to provide our own user friendly version of the form. Such as:

  • The “traditional” statutory demand form in PDF format to print and complete by hand;

  • The “traditional” statutory demand form in Microsoft Word format to complete on your computer and then print;

  • The Net Lawman version, which we believe is easier to complete on your computer

  • Statutory declaration re service of statutory demand


The statutory demand is still powerful weapon to recover the debt. It warns that debtor and creates the fear of insolvency of bankruptcy in case of default. It is your right to chase the debt.

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