What exactly is a Statutory Demand?

~Beanie~

As above...

My friend (honest!) has received one for an amount just short of £2K which relates to a Lloyds TSB credit card debt. The SD has come from a DCA, can't remember which though, 1st Credit possibly? What will happen? I've read somewhere that 90% of Statutory Demands are bluffs to try and get you to pay, is this correct? Are they likely to go for bankruptcy for £2K?

I don't think that she has any intention of coming to a repayment arrangement or contacting the court to get it set aside so I am wondering what will happen next I'm don't agree with this course of action but hey, what can I do?

The letters/demands are all going to a house that she moved out of in Nov 07 and which is being repossessed in the next couple of weeks. She has no assets or belongings that baliffs can take other than clothes and a bed. She is lodging at my house but hasn't given anyone my address.

Thanks x

Conor_3

Copied from Debt Advice Bureau website..hope it helps.

Statutory Demand

A statutory demand requires that the debtor either:

• Pays the relevant amount
• Offers to secure it against property
• Offers to repay the debt in a way that is satisfactory to the creditor. For example, by instalments.

Some creditors use statutory demands as a way of persuading debtors to pay off the debt, usually by borrowing elsewhere.

However, statutory demands should be taken seriously. After 21 days the creditor can petition for a bankruptcy order. Therefore, it is usually worth contacting the creditor by telephone and asking them what their next step will be.

Ignoring a statutory demand may encourage the creditor to petition for bankruptcy. It is worth bearing this in mind, particularly if the debtor is contemplating petitioning for his own bankruptcy.

If the debtor wants to avoid bankruptcy he should consider:

• Making payment(s) to reduce the debt to less than £750; or
• Making an offer to pay by instalments; or
• Making an offer of a reduced amount in settlement of the debt; or
• Applying to have the statutory demand set aside

Setting aside a statutory demand.

21 days after the serving of the statutory demand, the creditor can petition for the debtor’s bankruptcy unless it has been ‘set aside’.

An application to set aside the statutory demand can be made if:

• There is a substantial dispute about the money owed;
• There is a counterclaim of more than the money owed;
• The creditor holds security that equals or exceeds the debt in value;
• On ‘Other Grounds’. Though not defined, these can include:
  • The demand was issued in error, e.g. for a secured debt or for an amount of less than £750;
  • Execution has been stayed on a judgement;
  • The debtor is complying with an instalment order (so the debt is not strictly due); and
  • The creditor failed to comply with the rules and prejudiced the debtor in the process;

An application to set aside must be made with 18 days of the statutory demand being served. Forms 6.4 (application) and 6.5 (affidavit) must be completed and taken to the court. However, the court can dismiss the application if there are no grounds.

If there are grounds, a hearing will be arranged at which the court will decide whether the demand will be set aside.

If the debt falls under the Consumer Credit Act 1974, the court should also consider if any relief is available to the debtor under the Act. This would include a time order application.

stapeley

First I would say, is you can advise are much as you like , but its up to her to sort it . Her first step could be to log on to this website ! Has she ever requested a CCA from the DCA ?

~Beanie~

I doubt it. She isn't denying that she owes the money, she just seems to have the attitude of 'So go and make me bankrupt then, I've got no money anyway!'.

I just wondered what was likely to happen next after receiving the demand. I think bankruptcy is looming

fermi

While it's not impossible that 1st Credit would go ahead with a bankruptcy, for that amount it is highly unlikely. They would be mad to do so given your friends circumstances.

It can cost them over £1,000 in up front fee/costs to do it, and they wouldn't have any guarantee of getting those back let alone any of the debt itself.

1st Credit send out 1,000's of these SD's as a way of scaring people. I can only think of one or two cases where they have actually done it.

Your friend should talk to one (or more) of the organisations in my signature if they are in a situation where they don't care if a creditor would make them BR.

Conor_3

~Beanie~ wrote: »

I doubt it. She isn't denying that she owes the money, she just seems to have the attitude of 'So go and make me bankrupt then, I've got no money anyway!'.

I just wondered what was likely to happen next after receiving the demand. I think bankruptcy is looming

TBH whilst it may seem a blase?? attitude to be taking, if she's got nothing and no way of paying it, it's not a bad one as it means they'll be paying for the BR which saves her another few hundred quid if she'd done it herself.

fermi

Conor wrote: »

TBH whilst it may seem a blase?? attitude to be taking, if she's got nothing and no way of paying it, it's not a bad one as it means they'll be paying for the BR which saves her another few hundred quid if she'd done it herself.

I can see why that would appeal. But one problem with that is, if they actually want to go BR then waiting for a bunch of "scare mongers" like 1st Credit to do it for such a small amount and no gain for themselves is likely to be a long and fruitless wait. :rolleyes:

If they get in touch with one of these organisations: Non-profit Debt Counsellors' List then your friend will be able to get professional advice on how to approach this and their wider situation.

If bankruptcy is something that is then decided to be the best way forward, then your friend would be best off planning ahead on the assumption that the threats by 1st Credit are "idle" (as they normally are). If 1st Credit are then stupid enough to do it, then that is a bonus.