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Statutory demand

A formal written demand for payment of a debt of £5,000 or more; if ignored for 21 days it can be used to present a bankruptcy or winding-up petition.

Definition

A statutory demand is a formal written demand served by a creditor on an individual or company under the <a href="https://www.legislation.gov.uk/ukpga/1986/45/section/268" target="_blank" rel="noopener noreferrer">Insolvency Act 1986</a>. For individuals, the relevant forms are Form SD1 (undisputed debt) and Form SD3 (judgment debt); for companies, the equivalent is a written demand before a winding-up petition. The minimum qualifying debt for an individual is £5,000 (raised from £750 by the Debt Respite Scheme regulations 2021); for companies it is £750. The recipient has 21 days to pay, secure the debt to the creditor's satisfaction, or apply to court to have the demand set aside. If none of these steps is taken, the creditor may present a bankruptcy petition (individual) or a winding-up petition (company). A statutory demand served on an individual does not require a court judgment first — it is a standalone demand. However, if the debt is genuinely disputed on substantial grounds, the court will set it aside on an application under <a href="https://www.legislation.gov.uk/uksi/1986/1925/rule/6.5" target="_blank" rel="noopener noreferrer">Insolvency Rules 2016, r.10.5</a>.

In practice

If you receive a statutory demand, act immediately — you have only 18 days to apply to court to set it aside (the court requires the application before day 18 to hear it before the 21-day period expires). Do not ignore it. If the debt is disputed, gather your evidence and apply on Form IAA (insolvency application). If the debt is valid but you cannot pay, consider your options carefully: a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA), or bankruptcy itself. See the <a href="/guides/debt/debt-management-plan" class="body-link">debt management plan guide</a>, the <a href="/glossary/limitation-period" class="body-link">limitation period entry</a> (a statute-barred debt cannot support a valid statutory demand), and the <a href="/news/debt-relief-order-threshold-increase" class="body-link">DRO threshold increase news item</a>.

Related terms

Claim A formal request asking a court to order something, such as payment or the return of property. Enforcement The official process of making someone do what a court decision requires. Judgment The court's final decision in a case. Limitation period The time the law allows for starting a claim. Once it ends, the claim can usually be defeated. Letter before action A formal letter sent before starting court proceedings, setting out the claim and giving the other side a chance to resolve the dispute.