A statutory demand is a shot across the bow and the pre-cursor to bankruptcy, but until it arrives in the post it is an empty threat. Even if it does arrive, there are a number of things that need to happen before it converts into a bankruptcy and all is not lost.
However, there are some creditors that need to be taken seriously and heading this list is HMRC. People with tax arrears are usually given 12 months to get their affairs in order, but this is often insufficient time to repay the often thousands of pounds in question and a Statutory Demand is the result. HMRC has the means and the will to make this happen, and follow through just about every time.
The people who have most to fear from a statutory demand are those with properties with equity, as these will be at risk in bankruptcy. In the case of properties with equity, a Trustee is appointed who is a private Insolvency Practitioner and that means very high fees. And when we say high fees, it is not uncommon for a private Insolvency Practitioner to charge £15,000 – £20,000 for his or her services.
If there is no equity in the property, the case remains with the Official Receiver and the property is not lost, provided mortgage payments are maintained. Therefore, if you receive a statutory demand through the post, it is best to get it straightened out unless, of course, you have no assets in which case the creditor might actually be doing you a favour.
‘Somebody is threatening bankruptcy but I’ve received no Statutory Demand’ is just one of hundreds of questions we’ve answered over the years, but feel free to call us on 01425 600129 if you have any more questions or need bankruptcy help. We are here to help.