What does it mean if I get a statutory demand?

Full answer

A statutory demand is a formal written demand for payment of a debt that, if ignored, lets a creditor petition for your bankruptcy (if you are an individual) or to wind up your company. It affects sole traders, company directors and limited companies who owe an undisputed debt above the threshold: currently GBP 5,000 for an individual and GBP 750 for a company. The mechanism matters. The demand is served directly by the creditor -- no court is involved at this stage, so it is not a County Court Judgment (CCJ) and does not itself appear on your credit file. You have 21 days from service to either pay, reach an agreement, or (for individuals) apply to court to set the demand aside if the debt is genuinely disputed, already paid, or you have a valid counterclaim. If nothing happens within 21 days, the creditor can present a bankruptcy or winding-up petition, and that escalation is what causes lasting damage. Worked example: a contractor is owed GBP 8,000 by another sole trader. They serve a statutory demand. The debtor has 18 days left, disputes GBP 2,000 of it, and applies to set aside the demand on the disputed portion while paying the GBP 6,000 that is clearly owed -- stopping the petition. 2026/27 point: the thresholds (GBP 5,000 individuals, GBP 750 companies) are set in insolvency legislation and are unchanged for the year, but always confirm the current figure on gov.uk before relying on it, as these can be revised. If you receive one, treat the 21-day clock as immovable and seek advice immediately -- ignoring it is the single worst response.