Statutory Demands – An effective tool to collecting debts?

So, you are a small business and are owed £5,000 for unpaid invoices by a supplier. But you have received no response or any payment. Would sending a statutory demand be a useful tool for you to use to collect the debt?

The Process

A Statutory Demand is a formal demand for payment to be made within 18 or 21 days if the debt is undisputed and unsecured. There is no court fee but the correct form must be used by the Creditor. The process is considered to be the pre-curser to carrying out a form of insolvency process (such as bankruptcy for an individual or compulsory liquidation for a company).

The Debt Collection Centre are specialists in this area and in the area of insolvency.

Individual – The debt must total to £5,000 or more. An individual must be served personally. An individual has 18 days after being served to make payment or make an application to the court to set aside the Statutory Demand. Should a set aside application not be received then the Creditor may after 21 days apply to the court for the individual’s bankruptcy.

Company – The debt must total to £750 or more. A company has 21 days after being served to make payment or to make an application to the court for an injunction against a winding up petition being advertised. If payment or a response is not received then the Creditor may after 21 days apply to the court to liquidate the company.


This is a fast procedure as you can see from the above deadlines to enable a Creditor to ‘flush out’ a Debtor and make them either pay or respond. The procedure is free other than the fee of a process server agent if your debtor is an individual.

A Creditor does not need to take any further insolvency action against the debtor if they do not wish to do so.


If the Statutory Demand is set aside then the Creditor may have to pay considerable costs to the debtor and/or the Creditor’s own legal fees.

The time limit to apply for a bankruptcy petition following on from serving a statutory demand can be tight. Take specialised legal advice to ensure you are within the correct time limits to take the appropriate action.

The fees for a bankruptcy or winding up petition can appear expensive and these may not be recoverable from the bankrupt’s or company’s insolvency estate. Here at the Debt Collection Centre we have links and contacts with Insolvency Practitioners who are able to investigate the Debtor’s assets and conduct to possibly produce further monies for all creditors in the insolvency estate. Please contact us to learn more.


If as the above example you have a debt against a company for £5,000 and they are not responding to you then we would recommend using a statutory demand to prompt payment or a response. If the debt is disputed then it might be better to look into their disputes and if not resolved from further correspondence consider meeting with the debtor or taking legal advice from an expert such as the Debt Collection Centre.

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