Have you ever failed to pay your debt on time? If yes, chances are you might face pressure to make a payment in the form of a statutory demand letter and reminders. In most cases, a statutory demand is often the last resort for a creditor that hasn’t been paid on time by your business. That’s why your business would have legal repercussions if ignored. Keep reading to find out how to deal with a statutory demand.
Statutory demand – what is it?
A statutory demand is basically an official document which demands your business to pay your debt for the creditor. It is often sent by your creditor after other types of debt collection like reminder letters or phone calls have failed. A solicitor is required for sending statutory demands, which costs a lot of money for the creditors to hire. This means that when you receive this document, the creditor is undoubtedly ready to take serious action against your business, so you should seek guidance from across the solicitors Chester landscape.
Requirements for statutory demands
A creditor cannot just issue and send you a statutory demand to prompt an immediate payment of their debts. In fact, they have to meet a few requirements:
– The debt should be more than £750
– The debt shouldn’t be secured by an asset worth more than the debts
– The debt should be agreed on by your company without any dispute
– The creditor mustn’t owe any debt to your business
If the creditor meets all of these conditions, they can send to you a statutory and require a debt payment within 3 weeks.
What should you do with a statutory demand?
When you receive a statutory demand, it suggests that the situation is incredibly serious. Thus, your business should never neglect it, or the creditor will issue a petition to liquidate the assets. There are many to respond to statutory demands. The most obvious one is to pay all of your debt to the creditor. So if your business has sufficient cash flow and funds, this should be the first response to a statutory demand.
But what if your company is in financial difficulty? Then it is necessary to negotiate a CVA or company voluntary arrangement with your creditor. This document will enable your company to pay a partial or full amount over an agreed period. Make sure to do all of these tasks within 3 weeks.
What if you neglect a statutory demand?
Since a statutory demand is the last resort of your creditor to get their money back, they can file a petition to the High Court. As a result, it will lead to the liquidation of your assets and the closure of your business to repay the creditor. Therefore, make sure to respond to the statutory demand quickly to avoid these issues.