Statutory demands explained
A statutory demand is one of the most powerful tools a creditor has — but it’s a blunt one. Here’s when it works, and when to think twice.
A statutory demand is a formal, written demand for payment of an undisputed debt. Its power comes from what happens if it’s ignored: after 21 days you may be able to petition to wind up a company or make an individual bankrupt. That threat alone is often enough to get a solvent debtor to pay.
The thresholds
- Companies: the debt must be at least £750.
- Individuals / sole traders: the debt must be at least £5,000.
The debt must be for a fixed sum, due now, and — crucially — not disputed on genuine grounds.
How it works, step by step
- You prepare and serve the demand in the prescribed form.
- The debtor has 21 days to pay, agree terms, or apply to set the demand aside (individuals).
- If they do nothing, you may petition for winding-up (company) or bankruptcy (individual).
Important: a statutory demand is not a debt-collection letter. Using one for a disputed debt can backfire — the debtor can apply to have it set aside and you may be ordered to pay their costs.
When a statutory demand is a good move
- The debt is clear, undisputed and over the threshold.
- You believe the debtor can pay but is choosing not to.
- You want fast, serious pressure without the delay of a court claim.
When to avoid it
- There’s any genuine dispute about the amount or the goods/services.
- The debtor is already insolvent (you may just be joining a queue of creditors).
- You actually want to preserve the commercial relationship.
A statutory demand is often best prepared with professional help to avoid procedural mistakes. Get matched and we’ll connect you with a partner who can serve one correctly — or suggest a better route.