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.

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).

The most recent Insolvency Rules (IR) came in to place on 6^th April 2017, with the intention of modernising and streamlining the initial process. This involved cutting costs on insolvency, as well as consolidating previous amendments, and ensuring that the language used is both modern and gender-neutral for the people of England and Wales.

Under the Insolvency Rules 1986 (Amended on 6^th April 2017) came the abolition of statutory forms, which were replaced by specific forms, where prescribed information could be contained.

The changes to the new IR include: