When dealing with a statutory demand the creditor can follow the bankruptcy process or winding-up proceedings, although usually as a last resort to assist the creditor with the details of the debtor’s assets. A bankruptcy or winding-up petition is usually filed by a creditor, in the event that the debtor is unable to pay.

Creditors must be made aware of avoiding an allegation of abuse of process, which occurs when a creditor petitions for bankruptcy or the winding-up process in order to obtain collateral or any other grounds separate from the initial debt. As the new debt that the creditor is claiming for is undisputed, and therefore abuses the bankruptcy process.

Debt-recovery or credit-collection agents are utilised by numerous organisations in order to redeem a variety of different payments from debtors, whether that be for trade debts, rent arrears, parking charges, or even utility bills.

Debt collection companies must obtain a consumer credit license from the Financial Conduct Authority, which is in place to regulate consumer credit activities, and monitor any unlawful tactics against consumers.

It is not unusual for debt to be disputed, although there must be substantial reasoning behind the dispute, and will ultimately cause conflict between the consumer and the debt collection agency.

What are the necessary steps to take when an individual is served a disputed statutory demand?

One option is to contact the creditor to dispute the statutory demand, which will lessen costs for both parties, however a statutory demand must be responded to within 21 days, therefore this could be problematic if a response is not received from the creditor within this time frame.

If no response is received from the creditor, then the next step is to submit an application to the appropriate court (Usually the court that set out the statutory demand itself) to set aside a statutory demand under the recent Insolvency Rules (6^th April 2017).

What is the minimum amount of demanded debt in a statutory demand?

For corporate debtors the minimum amount is £750.

For individual debtors the minimum amount is £5,000 – Under the Insolvency Act 1986 (Amendment Order 2015) which was revised on 1^st October 2015.

Although the sum of £750 still applies to bankruptcy petition prior to 1^st October 2015.