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Statutory Demands

What is a Statutory Demand?

A statutory demand is usually considered as a precursor step to bankruptcy. It is favoured by the creditor for urging you to fulfill your debt obligation. It is served without any court involvement and a judgement isn't necessary; it can be served as soon as the debt is due. A statutory demand ultimately gives you 21 days warning to pay the debt. If you don't respond or pay the debt within the 21 days, the creditor can follow up with a bankruptcy petition.

What if I dispute the Statutory Demand?

If you (the debtor) dispute the Statutory demand you have 18 days to apply for it to be challenged and set aside (dismissed). Then, if the court does not agree with your application, your creditor is given permission to proceed with bankruptcy. If the court agrees with your application, your case will be passed on to a Bankruptcy registrar, who will review your case and arrange a hearing

How do i get a Statutory Demand set aside?

in order to get a statutory demand set aside you must satisfy one of the following criteria:

  • Dispute the amount of the debt on the demand
  • The person issung the demand also owes money - also known as a counter claim
  • The person issuing the statutory demand is holding some sort of security that equals or exceeds the debt owing
  • The demand was issued in error
  • Execution has been stayed on a judgement debt
  • You are already compliant with an instalment order on the debt. Therefore, the debt is not owed and you are in the process of paying the debt back
  • The creditor didn't adhere to the rules and predjudiced you in the process

Other ways to avoid Bankruptcy proceedings - You do not dispute the debt, but cannot pay it

If you receive a statutory demand and do not dispute the debt you could:

  • offer to pay the debt in instalments
  • Make a reasonable offer to settle the debt in full

If you have received a statutory demand and would like some advice, contact us as a matter of urgency and we will provide you with debt advice for your situation.

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