Home » Answers Hub » After a statutory demand
Two clocks start. The debtor has 21 days to pay, secure or compound the debt; if they do nothing, the creditor may present a bankruptcy petition (individuals) or winding up petition (companies), with the unmet demand standing as evidence of inability to pay. An individual debtor also has 18 days to apply to set the demand aside, which freezes the petition until the application is decided. Companies have no set aside procedure; they apply instead to restrain presentation of a petition.
A statutory demand is not itself a court process, which misleads some recipients into treating it as a strongly worded letter. It is better understood as a 21 day countdown to insolvency proceedings, with a short window for the recipient to change the ending.
Payment ends the matter, and so, for petition purposes, does securing the debt or compounding it, reaching a settlement the creditor accepts. Genuine dispute takes a different track depending on who the debtor is. An individual applies within 18 days to set the demand aside, on grounds such as a substantial dispute over the debt, a cross claim equalling or exceeding it, or defects in the demand; a properly made application stops the creditor petitioning until it is determined. A company cannot apply to set aside; its remedy is an application for an injunction restraining the creditor from presenting or advertising a winding up petition, made on essentially the same substantive grounds. What no debtor should do is nothing, because silence converts the demand into the creditor's key evidence.
An unsatisfied demand raises the statutory presumption that the debtor cannot pay their debts, which is the foundation for a bankruptcy petition against an individual (debt of £5,000 or more) or a winding up petition against a company (£750 or more). The petition stage brings its own strict service requirements, personal service on an individual debtor, registered office service on a company, and its own costs, court fees and deposits, so creditors typically pause at day 21 to weigh recovery prospects, sometimes with an asset trace, before committing.
Every one of these deadlines runs from service, and both the set aside court and the petition court will examine how the demand was brought to the debtor's attention. A professional certificate of service, with the attempt history behind it, is what keeps the timetable unarguable.
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