Debt recovery guide · Court & enforcement
Statutory demands: the 21-day letter companies can't ignore
A statutory demand is the most serious letter in debt recovery: a formal demand which, if unpaid for 21 days, lets you petition to wind up a debtor company (or bankrupt an individual). It works because it's existential — a winding-up petition can freeze the company's bank accounts and end its trading. Used correctly, many debts are paid within the 21 days. Used incorrectly, it's the classic own goal.
When you can use one
Company debtors: undisputed debts of £750 or more. Individuals: £5,000 or more (the bankruptcy threshold). No court fee to serve one — but proper service matters, and the follow-through (a winding-up or bankruptcy petition) is a genuine, costly court process, so never serve a demand you wouldn't be prepared to act on.
Why 'undisputed' is doing all the work
If the debtor genuinely disputes the debt on substantial grounds, a statutory demand is the wrong tool — they can seek an injunction to restrain a petition, and you can end up paying their costs. The test isn't 'they haven't paid'; it's 'they have no arguable reason not to'. Clean paper trail, acknowledged invoices, no live quality dispute: that's statutory demand territory.
This is a step to take with professional support — recovery agencies with legal partners serve statutory demands routinely and, more importantly, know when not to. It sits at the top of the escalation ladder our complete guide walks through.
Where this fits in the bigger picture
This is one step of a well-trodden path — demands, statutory add-ons, professional recovery, court, enforcement. The complete debt recovery guide walks the whole process, and the late payment calculator works out what you can add to a commercial debt today.
Related situations
General information, not legal advice.