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You can go bankrupt via your creditors. A statutory demand is a process of declaring your bankrupt. All this starts with sending with warning letters in case you fail to pay off the monthly installments to clear off the debt. 

You should not ignore such warning letters from your creditors. Moreover, you can avoid bankruptcy even if you have received a statutory demand. This guide will then help you to deal with the cases of statutory demands from the creditors. 

What is a Statutory Demand?

As you have already learned that a statutory demand is like a warning letter from your creditor. The statutory demand explains that you are unable to fulfill the installments to the loan or credit that you owe from your creditor. 

The statutory demands can also mention that you have moved to another arrangement without the consent or knowledge of the creditor. Then, the creditor can take you to the court and start legal procedures to make you bankrupt.

As per most of the statutory demands, you will get 21 days to reply to their warning. You have to answer them how you are going to pay off the debt. However, you need to pay the debt within those 21 days. In case, you fail to do so then there is no chance that you can avoid bankruptcy. That’s why you shouldn’t ignore the statutory demand issued by the creditor. Therefore, try hard so that the creditor should cancel or set aside the demand.

What to do if you Get a Statutory Demand?

The bad news is that you can’t escape the notice of statutory demands. In case you don’t pay attention to such warnings, then you are going to be bankrupt through your creditor. But there are numerous options that are available that you can opt to avoid the upcoming bankruptcy.

Hence, go to your financial advisor to discuss it. Clarify the issue of how you are going to be affected if you are declared bankrupt. Do the best that can save you from the bankrupt circumstance. Follow the advice from the advisor to efficiently handle the debt situations.

Additionally, you have the following options left when you receive any statutory demand from your creditor. Then, go through them and find out which one suits you.

Option 1: Apply to Cancel or Set Aside the Statutory Demand

The creditor can send you a statutory demand, by mistake. In case you don’t owe any money from them anymore, then you can request the creditor to cancel the statutory demand. You have to show proper evidence to prove the application.

However,  ensure that you perform this task as soon as possible. There are different time limits imposed by different creditors. You have to apply for the request within 18 days, generally. Go through the statutory demand to explore more about the time limit. This process is termed as set aside and if the court agrees with your evidence, then you can avoid bankruptcy.

The creditors can take you to the court within a definite period of time. If the period is over then the debt would be called statute-barred. After that, the creditor can’t apply the legal action against you. Check out if the time limit is over or not.

In case you are thinking to set aside the debt, you should get a piece of advice from an advisor. The process is quite technical and lengthy. You need to have enough information and confidence before you select this option.

Option 2: Fully Pay Off the Debt

In case you have received that statutory demand due to proper reasons, then this would be the easiest option to avoid the consequences. Well, this is even easier when you have enough money to pay off the debt in full. 

Option 3: Pay by Installments

If you can’t afford the money to pay off the debt at once, then this is the second-best option for you. Most of the creditors might settle down through regular installments if you contact them early after getting the warning letter. This is a more affordable option to skip bankruptcy.

Option 4: Check if the Creditor Agrees to Write Off the Debt

In case you have lost your current job and have already sold all your property and assets, then ask your creditor to write off the debt. Request the creditor for writing off the debt through a letter along with correct evidence. 

You need to convince them why they should write off the debt. If you can make them convinced that they would gain not a single penny from you, then they won’t drag you to the court. Thus you can easily avoid bankruptcy.

Option 5: Decrease the Debt Amount Below £5,000

There is another chance that you can use to avoid bankruptcy through payment. You might lower the debt expenses below £5000 by paying the rest of the amount. Then, the creditor can’t declare you bankrupt.

Option 6: Build up Security on your Property

In case you have your own house or property, then you can offer the creditor security over your property. If the creditor sells your property in the future, all your debts go paid off. This procedure is termed as a voluntary charge. Hence, ask an expert before you opt for a voluntary charge.

Option 7: Set up Individual Voluntary Agreement

You can end up with an individual voluntary agreement to pay off the debt. Ask the creditor if they can use your property or valuable assets to make you pay the loan. This is a legal procedure and the creditor can’t chase you anymore to make you bankrupt. 

Option 8: Accept the Fact of being Bankrupt

If you fail to convince your creditors to settle down for another scheme, then you are left with no option. Now, you have to make yourself believe that you have to face bankruptcy. 

You might decide to opt for bankruptcy as there is no other way. No need to connect your creditor if you have already reached this conclusion.

How can you Apply to Set Aside the Statutory Demand?

If option 1 suits your circumstances, then you can shrug off the allegation imposed by the creditor. Let’s check out under what circumstances you can apply for a statutory demand canceled or set aside. 

  • The statutory demand was issued, by mistake.
  • The amount owed by you is less than £5000.
  • There’s a genuine dispute between the creditor and you.
  • You have already earned a legal defense to protect you. 

If you have arranged one of the above-mentioned points, then you can proceed with the legal process to set aside the statutory demand. Now, take a look at how you can apply for the process.

Step 1: Choose the Right Court

The statutory demand generally mentions the court. You have to move to the same court to proceed with the case.

Step 2: Fill Out the Application Form

Next, you need to fill in an application form of IAA. This form is available on the official website of GOV.UK.

Step 3: Attend the Hearing Dates

The court will announce a set of dates. You need to present in the court on those mentioned dates so that you can win the case. In case you fail to make your application strong enough, then the case gets dismissed. Then, the creditor can apply to make you bankrupt immediately after the hearing.

Try to solve the issues regarding a statutory demand with the best possible advice from a financial advisor. Otherwise, the creditor can make you bankrupt, in no time. 

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