Statutory demand

A formal written demand that raises the stakes well beyond an ordinary reminder letter — ignoring one can open the door to bankruptcy or winding-up proceedings.

What is the minimum debt for a statutory demand?

For an individual debtor, the debt (or combined debts owed to one creditor) must be at least £5,000 before it can found a bankruptcy petition under section 267 of the Insolvency Act 1986. For a company, the threshold is much lower, at £750, before a winding-up petition can follow under section 123. There is no minimum for the demand itself — the threshold applies to the later petition.

Do I need a CCJ before I can serve a statutory demand?

No. A statutory demand does not require a judgment first — it can be used for any debt that is due and not genuinely disputed, whether or not you have already sued for it. Many creditors do get a CCJ first because it removes any argument about whether the debt is owed, but it is not a legal requirement.

How long does the debtor have to respond?

21 days from service to pay the debt, secure or compound for it to the creditor's satisfaction, or the creditor can proceed to a bankruptcy or winding-up petition. An individual debtor has a shorter window — 18 days from service — to apply to court to set the demand aside, and a pending set-aside application generally stops the 21-day clock.

Can a statutory demand be set aside?

An individual debtor can apply to set it aside within 18 days of service, typically because the debt is genuinely disputed, the debtor has a counterclaim that equals or exceeds it, the demand was defective, or the creditor holds security covering the whole debt. Companies do not have the same formal set-aside procedure, but a genuinely disputed debt is a well-established ground for opposing any winding-up petition that follows.

Is a statutory demand the same as debt collection or bailiff action?

No. It does not itself seize goods, deduct wages, or place a charge on property — those are enforcement methods that follow a judgment. A statutory demand is a formal warning that non-payment can lead to insolvency proceedings, which is a serious step with consequences for the debtor's ability to hold certain roles and access credit, not a method of collecting money directly.

What happens if the debtor ignores it?

If 21 days pass with no payment, no acceptable arrangement, and no successful application to set it aside, the creditor can present a bankruptcy petition (against an individual) or a winding-up petition (against a company). Ignoring a statutory demand does not make it go away — it is usually the point at which the risk to the debtor becomes much more serious.

Why a statutory demand is a different kind of pressure

Most enforcement methods you meet as a small claims creditor — a warrant of control, an attachment of earnings order, a charging order — follow a judgment and are aimed at extracting payment from a debtor who has already lost the case. A statutory demand works differently, and does not need a judgment at all. It is a formal step under insolvency law, warning the debtor that if the debt is not dealt with within 21 days, the creditor can ask the court to make the debtor bankrupt, or wind up their company.

That makes it a powerful tool against a debtor who could pay but is choosing not to — few people or businesses want a bankruptcy or winding-up petition on their record — but it is a blunt one. It is not designed for debts that are genuinely disputed, and using it that way is likely to see the demand set aside, with a costs risk for the creditor.

How the process works

• Using the prescribed form, personally where possible, setting out the debt clearly and the consequences of non-payment.
• The debtor has 18 or 21 days.
• An individual debtor has 18 days to apply to set the demand aside, and 21 days overall to pay or reach an arrangement before a petition can follow.
• Set-aside application (if made).
• The court considers whether the debt is genuinely disputed, offset by a counterclaim, or otherwise defective, and the 21-day clock generally stops while this is decided.
• Petition, if unpaid.
• If the demand is not satisfied and no set-aside application succeeds, the creditor can present a bankruptcy or winding-up petition to the court.

A sole trader is owed £6,800 by a small limited company for completed work, confirmed by an unpaid invoice the company has never disputed. Rather than issuing a money claim, the sole trader instructs a process server to serve a statutory demand on the company's registered office.

Company winding-up threshold

The company does not dispute the debt and does not want a winding-up petition on its record, which would seriously affect its ability to trade and bank normally. It pays in full within two weeks, without the sole trader ever having to issue proceedings.

County Court Judgment (CCJ)

Insolvency (England and Wales) Rules 2016

Statutory Demand — Small Claims Glossary

What a statutory demand is, the £5,000 individual and £750 company thresholds, how the 21-day process works, and how it can be challenged.