You've tried everything to get the person or business that owes you money to pay you. You've chased and chased and chased. Maybe they've promised to pay but it's never come through. Maybe they've gone quiet. What's your next option? You could issue a court claim, but that's a slow process and can take many months to get to a trial if its not settled before then. Your other option is to serve a statutory demand. It's quite an agressive move and only really appropriate where the debt is not disputed. However, it can be a really useful tool to focus your debtor's mind to payment. PS. Anyone who is owed money can serve a statutory demand, you don't have to be a lawyer.
First things first...
You need to answer some questions to determine whether serving a statutory demand is appropriate :
1) Does a person or a company owe you money?
2) If it's a person do they owe you at least £5,000 (that's the statutory limit required to take the next step after serving a statutory demand on a person if they don't pay)
If it's a company, do they owe you at least £750 (as above, the statutory limit to take the next step)
NB. you can serve a statutory demand for any amount but if its less than the statutory amounts for taking the next step e.g. bankruptcy or winding up the company there may be little point and you may be wasting time and money doing it)
3) Is the debt less than 6 years old. If its over 6 years old you can't serve a statutory demand.
If the answer is yes to these questions you can take the next step...
Next, you need to figure out which form you need. There are two : SD1 and SD2.
- If your debtor is a company use SD1 (click here for the link to the gov.uk form)
- If your debtor is an individual use SD2 (click here for the link to the gov.uk form)
Filling in the form
Once you've determined which form you need you will need to fill it in with as much detail as possible. When we complete these things at HooperHyde we aim to include as much information as possible. So if, for example, someone who wasn't connected to the case read the statutory demand (e.g. a judge), it would be clear to them how the debt came to be and how much is owed. That way there is no argument of ambuity and misunderstanding by your debtor.
After that... Service
Once you have filled in the form and signed it, you will need to "serve" it (send it) to the debtor. There are various ways a statutory demand must be served and it's important to get this step right. You can :
- hand it to the individual who owes you money (you should try all their known addresses)
- leave it at the registered office of the company or partnership that owes money (or the main place of business if they do not have a registered office)
- give it to the company’s director, company secretary, manager or principal officer
- or get a ‘process server’ to serve it for you (a solicitor can arrange this)
NB. You can only send it by registered post or put it through a letterbox if it cannot be delivered in person e.g. you've tried all of the above to no avail.
The debtor has 21 days to pay the debt or agree to some kind of repayment plan or settlement. If they don't you can take the next step. This will either be winding up petition against a company that owes you money or starting bankruptcy proceedings against an individual. (There are separate processes for this which we will discuss in another blog post).