Application to Set Aside a Statutory Demand: What It Is and How to Do It

If you are facing a statutory demand, you may be wondering what options you have to challenge it. One possible course of action is to apply to set aside the demand. In this blog post, we will explain what a statutory demand is, when and how to apply to set it aside, and the form required to make the application.

What is a Statutory Demand?

A statutory demand is a formal notice issued by a creditor to a debtor, demanding payment of a debt of £750 or more. If the debtor fails to pay the debt or make satisfactory arrangements for payment within 21 days, the creditor can use the demand as the basis for a bankruptcy petition or a winding-up petition against the debtor.

Be advised that they don’t always look the same.

When Can a Statutory Demand Be Set Aside?

A statutory demand can be set aside if the debtor has a genuine dispute over the debt, or if there is a defect in the demand that makes it invalid. The debtor must apply to set aside the demand within 18 days of being served with it.

How to Apply to Set Aside a Statutory Demand

To apply to set aside a statutory demand, the debtor must complete and Court Form IAA, which is prescribed by the Insolvency (England and Wales) Rules 2016. However, if the application is made in Scotland, Form 6.5 must be used instead. The form must be completed in full, signed and dated by the debtor or their solicitor, and filed with the court along with the supporting evidence. Good evidence could be a completed Income and Expenditure (DMP) showing how you plan to make monthly payments towards the debt.

What is Form IAA?

Form IAA is used to apply for an order or directions in relation to an insolvency matter, including to set aside a statutory demand. The form must be completed in accordance with the Civil Procedure Rules and the Insolvency Rules. It must set out the nature of the application being made, the grounds for the application, and the order being sought. The form must also include any supporting evidence or documentation and be signed by the applicant or their representative. A copy of Form IAA ( Insolvency Act Application Notice) and also, Guidance Notes for the Applicant in filling out Form IAA can be viewed via both those links. DON’T expect the guidance notes to be much of assistance, reading through them is like wading through mud! I would suggest that you fill out the form as best you can. Courts are very reluctant to make someone bankrupt, if the debtor can show an exit route (monthly payments for one).

Once the form is filed with the court, it will be considered by a judge who will decide whether or not to grant the application. If the application is granted, a hearing will be scheduled and the parties involved will be notified of the date, time, and location of the hearing.

It is important to note that the application form must be served on all relevant parties, including the other parties involved in the insolvency matter, in accordance with the rules of service. Failure to serve the application form correctly could result in delays or the application being rejected.

Conclusion

In summary, a statutory demand can be a serious matter for a debtor, as it can be used as the basis for a bankruptcy petition or a winding-up petition. However, if the debtor has a genuine dispute over the debt or if there is a defect in the demand that makes it invalid, they may be able to apply to set it aside using Form IAA. If the application is successful, the statutory demand will be cancelled and the debtor will have more time to deal with the debt. It is important to seek legal advice or assistance if you are facing a statutory demand or need to make an application in an insolvency matter.