The sharpest lawful instrument in debt recovery — and the easiest one to misuse.
A statutory demand is a formal written demand for payment which, if not paid or set aside within 21 days, allows a creditor to petition to wind up a company or bankrupt an individual. It is the sharpest instrument in commercial debt recovery, and the one most likely to backfire if it is used on the wrong debt.
Against a company, the debt must exceed £750 — the threshold in section 123 of the Insolvency Act 1986. Against an individual, the threshold is £5,000.
Not because of the 21 days, but because of what a winding-up petition does to a company that is still trading. A petition is advertised. Banks freeze accounts when they learn of one. Suppliers withdraw credit. For a solvent company that has simply been ignoring an invoice, that prospect concentrates the mind more effectively than any letter.
Which is precisely why it must only be used where the debt is genuinely undisputed and the debtor can pay.
Using a statutory demand as a debt collection tactic on a disputed debt is a well-known abuse of process, and the courts treat it as one.
If the debtor applies to set the demand aside on the basis of a genuine substantial dispute or a cross-claim, they will usually succeed, and the creditor can be ordered to pay their costs. If a petition has been presented on a disputed debt, it can be restrained by injunction and the costs consequences are materially worse. There is also a real risk of a claim for the loss caused by the petition to a company that turns out to have been solvent.
Is the debt clearly due and undisputed? Has the debtor been given a proper opportunity to raise a dispute and failed to? Is the debtor trading and apparently able to pay? Are you prepared to actually petition if it is ignored? If the answer to any of those is no, a statutory demand is the wrong tool and we will say so.
If the demand is ignored and you do petition, the costs are substantial and mostly payable up front:
Plus the legal fees for preparing and presenting the petition, agreed in writing beforehand. The deposit is largely refundable if no order is made. Court fee as per the scale in force from 13 July 2026.
That is why the demand and the petition are different decisions. A great many statutory demands are paid without a petition ever being presented — but you should only send one if you are willing to follow through, because a demand that is ignored with no consequence has taught the debtor that you are bluffing.
For most commercial debts it is. A County Court claim is cheaper to start, carries no risk of an abuse of process argument, and produces a judgment you can enforce in several ways. A statutory demand is the right answer in a narrower case: a clearly undisputed debt, a trading company that can obviously pay, and a creditor who wants the matter resolved quickly rather than correctly over months.
21 days from service to pay, secure or compound for the debt. An individual has 18 days to apply to set the demand aside. If the demand is neither complied with nor set aside, the creditor may petition.
Then in almost all cases you stop and reconsider. If the dispute is genuine and substantial, pressing on to a petition risks an injunction and an adverse costs order. The right move is usually to withdraw and issue a County Court claim instead, where a disputed debt can be properly determined.
Not against a company — the debt must exceed £750 for the deemed inability to pay under section 123(1)(a) of the Insolvency Act 1986. Against an individual the threshold is much higher, at £5,000.
Only where it is the right instrument. We will draft and serve a statutory demand where the debt is clearly undisputed, the debtor appears able to pay and you are prepared to petition if it is ignored. Where it is being reached for as a scare tactic on a debt with an argument in it, we will tell you why that is a bad idea and what to do instead.
The letter-before-action checklist, the interest and compensation rules, and the escalation ladder with what each step costs. One email, no sequence.
Tell us what you are owed and who owes it. You get back what the debt is actually worth once interest and compensation are added, what we would do first, and the fixed fee for doing it.