Setting Aside a Statutory Demand (2026 Guide)

When Do You Need to Set Aside a Statutory Demand?

You should consider applying to set aside a statutory demand if any of the following apply:

• You genuinely dispute the debt — you believe you do not owe the money, or you do not owe the amount claimed. The dispute must be genuine and on substantial grounds — a vague or fanciful disagreement is not enough.
• You have a cross-claim, set-off, or counterclaim — you accept you owe the money but the creditor also owes you money, and your cross-claim equals or exceeds the amount of the demand. For example, the creditor owes you £6,000 for work you did for them, and they are demanding £5,000 you owe them.
• The creditor holds security for the debt — and the security is sufficient to cover the debt. If a creditor has adequate security (such as a charge over your property), they should enforce their security rather than demanding payment by statutory demand.
• There is some other reason why the demand should be set aside — for example, the demand was not properly served, or it contains errors that make it defective, or making a bankruptcy order would be unjust in all the circumstances.
• The debt is below £5,000 — a creditor cannot petition for bankruptcy unless the debt is at least £5,000. If the statutory demand is for less than £5,000, it cannot form the basis of a bankruptcy petition and should be set aside on that ground.

The 18-day deadline applies from the date the statutory demand was served on you (not the date it was issued by the creditor). If 18 days have already passed, you cannot apply to set aside the demand — but you can still oppose the bankruptcy petition itself if one is later presented.

What Setting Aside Involves

Setting aside a statutory demand means asking the court to declare that the demand should not have been served, or that it should not be used as the basis for a bankruptcy petition. If the court sets aside the demand, the creditor cannot rely on it to petition for your bankruptcy. This does not mean the debt goes away — the creditor can still sue you in court for the money — but it prevents the extreme step of bankruptcy based on that particular demand.

The application is made under Rule 10.4 of the Insolvency (England and Wales) Rules 2016, which implements s.267 and s.271 of the Insolvency Act 1986. The application is heard by a registrar or district judge, usually at a short hearing.

Key points:

• The burden is on you. You are the applicant and you must satisfy the court that there are grounds to set aside the demand.
• The standard is not high. For a genuine dispute, you do not need to prove your case on the balance of probabilities. You need only show that there is a genuine triable issue — that is, a real question to be resolved which is not fanciful or without substance.
• The hearing is summary. The court will not conduct a full trial of the underlying debt dispute. It will simply decide whether your grounds for setting aside are made out on the evidence before it.
• If the demand is set aside, the creditor cannot present a bankruptcy petition based on it. They can still sue you for the debt through ordinary court proceedings.
• If the demand is not set aside, the creditor can proceed to present a bankruptcy petition once the 21-day period from the original demand has expired.

How to Apply to Set Aside a Statutory Demand: Step by Step

1. Act Immediately — The 18-Day Deadline Is Absolute

This is the most important step. You have 18 days from the date the statutory demand was served on you to file your application at court. This deadline is strictly enforced. The court has no general power to extend it, and late applications are routinely refused.

Count the days carefully. The day of service does not count — the 18 days start from the day after service. If the 18th day falls on a weekend or bank holiday, the deadline is the next working day.

If you received the demand by post and there is a dispute about when you actually received it, the date of service is presumed to be the date of delivery (or two business days after posting for first-class mail, unless you can prove otherwise).

2. Identify Your Grounds

You must identify the specific grounds on which you are asking the court to set aside the demand. The grounds are set out in Rule 10.5 of the Insolvency (England and Wales) Rules 2016:

Ground 1: The debt is disputed on substantial grounds (Rule 10.5(5)(a))

This is the most common ground. You must show that there is a genuine dispute about whether you owe the money, or about how much you owe. Examples include:

• The goods or services were defective and you have a valid claim for damages.
• The contract has been varied or the debt has been paid (wholly or in part).
• The creditor has breached the contract and you have a right to set off your loss against the debt.
• The debt is statute-barred (the limitation period has expired under the Limitation Act 1980).
• The amount claimed is wrong — the creditor has overstated the debt.

The dispute must be genuine and substantial. The court will not set aside a demand based on a spurious or invented dispute. However, the threshold is not high — if there is a real question to be tried, the demand should be set aside.

Ground 2: You have a counterclaim, set-off, or cross-demand equal to or exceeding the debt (Rule 10.5(5)(b))

If the creditor owes you money (or you have a valid claim against them) and your counterclaim equals or exceeds the statutory demand amount, the demand should be set aside. You must provide evidence of the counterclaim — a bare assertion is not enough.

Ground 3: The creditor holds sufficient security (Rule 10.5(5)(c))

If the creditor has a charge, lien, or other security over your property that is worth enough to cover the debt, the demand should be set aside. The creditor should enforce their security rather than using the statutory demand/bankruptcy route.

Ground 4: The court is satisfied, on other grounds, that the demand ought to be set aside (Rule 10.5(5)(d))

This is a catch-all ground. Examples include:

• The demand was not properly served (for example, left at the wrong address).
• The demand is defective — it does not comply with the prescribed form or contains material errors.
• The demand was served for an improper purpose — for example, to harass you or to apply pressure in unrelated litigation.
• It would be unjust to allow the demand to stand — for example, where you have a reasonable proposal for repayment that the creditor has unreasonably refused.

3. Prepare Your Application

Your application consists of:

• An application notice — this can be in Form IAA (Insolvency Act Application) or the general application notice form. It should identify the statutory demand you are challenging, state the grounds on which you seek to set it aside, and ask the court for the demand to be set aside.
• A witness statement — this is the most important document. It must set out the facts supporting your grounds in detail. Attach all relevant documents as exhibits — contracts, correspondence, invoices, bank statements showing payments, evidence of the dispute, evidence of your counterclaim, or whatever is relevant to your grounds.
• A copy of the statutory demand — exhibit this to your witness statement.

The witness statement must be signed by you and contain a statement of truth. It must be your own evidence — what you personally know and can verify. If you rely on information from others, identify the source.

4. File at Court

File your application at the court that would have jurisdiction to hear a bankruptcy petition against you — this is normally the court for the area where you reside or carry on business. You will need to pay a court fee for the application (as of August 2026, £326 for a general insolvency application, though fees are reviewed periodically — check the current fee schedule at the time of filing).

5. Serve Your Application on the Creditor

You must serve a copy of your application and witness statement on the creditor (the person or company that served the statutory demand on you). Service must be effected promptly — ideally at the same time as filing, or as soon as possible afterwards.

6. Attend the Hearing

The court will list your application for a hearing. This is normally a short hearing — typically 30 to 60 minutes. At the hearing:

• You (or your representative) present your grounds — explain why the demand should be set aside, referring to your witness statement and the exhibits.
• The creditor may attend and oppose — they may argue that there is no genuine dispute, or that your counterclaim is not valid, or that the demand is properly served and in good order.
• The judge decides — the judge will either set aside the demand, dismiss your application, or (occasionally) adjourn for further evidence.

If the judge sets aside the demand, the creditor cannot use it as the basis for a bankruptcy petition. The judge may make an order for costs — either in your favour (if the demand was clearly wrong) or in the creditor’s favour (if your application was without merit).

7. If You Miss the 18-Day Deadline

If the 18 days have passed and you did not apply to set aside the demand, you cannot make a late application in most circumstances. However, you are not without options:

• Wait for the bankruptcy petition. If the creditor presents a bankruptcy petition, you can oppose it at the hearing. The grounds for opposing a petition overlap significantly with the grounds for setting aside a demand — you can argue genuine dispute, counterclaim, or other reasons why a bankruptcy order should not be made.
• Pay the debt. If you can pay, do so. This removes the basis for both the statutory demand and any future petition.
• Negotiate. Contact the creditor and try to agree a payment plan. If the creditor accepts, they may not proceed to petition.

Key Deadlines

What Happens After the Set-Aside Application

If the demand is set aside:

• The statutory demand is cancelled. The creditor cannot rely on it to petition for your bankruptcy.
• The underlying debt is not affected. The creditor can still sue you for the money through ordinary court proceedings (for example, a Part 7 claim using Form N1). But they cannot use the bankruptcy route based on that demand.
• The court may order costs in your favour if the demand was improperly served or the debt was clearly disputed.
• If the creditor wants to try again, they would need to serve a fresh statutory demand — but if the same dispute still exists, a fresh demand would face the same challenge.

If the demand is not set aside:

• The statutory demand stands. If you have not paid within 21 days of the original demand, the creditor can present a bankruptcy petition.
• You can still oppose the bankruptcy petition at the hearing. The grounds for opposing a petition are broader than the grounds for setting aside a demand.
• The court may order costs against you if your application was without merit.

If a bankruptcy petition is presented:

• You will receive notice of the petition and the hearing date.
• At the hearing, you can oppose the petition by arguing that the debt is disputed, that you have a counterclaim, that you are able to pay (perhaps by proposing a payment plan), or that making you bankrupt would be unjust.
• If the court is persuaded that there is a genuine dispute on substantial grounds, it will normally dismiss the petition.

Common Mistakes

1. Missing the 18-Day Deadline

This is by far the most common and most devastating mistake. The 18-day deadline is strictly enforced. If you receive a statutory demand and intend to challenge it, you must act immediately. Do not wait to “think about it” or assume you have more time. Count the days from the day after service and file your application within that period. If in doubt about the service date, file as early as possible.

2. Filing Without Evidence

An application to set aside must be supported by a witness statement setting out your grounds with specificity. A bare application saying “I dispute the debt” without evidence or explanation will fail. The court needs to see why you dispute the debt, what evidence supports your position, and why the dispute is genuine and substantial.

3. Raising a Fanciful or Non-Genuine Dispute

The court will see through attempts to manufacture a dispute where none really exists. If you owe the money and have no genuine basis for challenge, an application to set aside will fail and you may be ordered to pay the creditor’s costs. Only apply if you have a real basis for dispute.

4. Not Attending the Hearing

If you file the application but do not attend the hearing, the court may dismiss your application in your absence. Unless you have a very good reason for non-attendance (in which case you should ask for an adjournment in advance), make sure you attend.

5. Confusing Setting Aside with Paying the Debt

Setting aside a statutory demand does not make the debt go away. It only prevents the creditor from using that particular demand as a basis for a bankruptcy petition. If you genuinely owe the money, the creditor can still pursue you through ordinary court proceedings. Setting aside the demand buys you time and prevents the nuclear option of bankruptcy, but it does not resolve the underlying debt.

6. Not Addressing All Grounds Properly

If you have multiple grounds — for example, a genuine dispute and a counterclaim — address each one properly in your witness statement with supporting evidence. Do not assume the court will infer your case. Be explicit and methodical.

7. Ignoring Service Defects

If the statutory demand was not properly served — for example, it was sent to the wrong address, or left with someone who does not live at your address — this is a valid ground for setting aside. But you must raise it explicitly. The court will not identify service defects for you.

8. Not Seeking Help Early Enough

Many people only seek advice after the 18-day deadline has passed. By that point, the right to apply to set aside has been lost. If you receive a statutory demand, get advice on the same day if possible. Do not delay.

The Rules That Apply

The law and procedure governing statutory demands and applications to set them aside are found in the following sources:

• Insolvency Act 1986, s.267 — the conditions that must be met before a creditor can present a bankruptcy petition, including the requirement for a statutory demand and the £5,000 minimum debt.
• Insolvency Act 1986, s.271 — the court’s power on hearing a bankruptcy petition, including the power to dismiss if the debt is disputed on substantial grounds.
• Insolvency (England and Wales) Rules 2016, Rule 10.4 — the procedure for applying to set aside a statutory demand, including the 18-day time limit.
• Insolvency (England and Wales) Rules 2016, Rule 10.5 — the grounds on which the court may set aside a statutory demand: disputed debt, counterclaim/set-off, creditor holds security, and other grounds.
• Insolvency (England and Wales) Rules 2016, Rule 10.1 — the requirements for a valid statutory demand, including the prescribed information that must be included.
• Practice Direction — Insolvency Proceedings — supplementary guidance on the procedure for set-aside applications.

Key case law:

• Ashworth v Newnote Ltd [2007] EWCA Civ 793 — the court should set aside a statutory demand where the debt is disputed on genuine and substantial grounds. Lawrence Collins LJ held there is no practical difference between "substantial grounds", "genuine triable issue" and "real prospect of success" — the same threshold as summary judgment. The court does not conduct a mini-trial on affidavit evidence.

Related Court Forms & Guides

• Form N260: Statement of Costs — the costs schedule used at summary assessment.
• Form N244: Application Notice — the form for interim applications.
• Start a Money Claim Online (OCMC) — where most civil money claims begin.
• Particulars of Claim — setting out the basis of your claim.
• Civil Court Forms Index — every civil court form guide in one place.

How Chris Can Help

Setting aside a statutory demand requires speed, precision, and the right evidence. You have only 18 days from service, and the application must include a detailed witness statement with supporting documents. This is where Chris can make a real difference.

Chris can help with:

• Assessing your grounds — reviewing the statutory demand and your circumstances to determine whether you have a genuine basis for setting aside, and which ground or grounds are strongest.
• Drafting your witness statement — preparing a detailed, evidence-based witness statement that sets out your case clearly and persuasively, with properly exhibited documents.
• Preparing your application notice — ensuring the application is in the correct form and filed within the 18-day deadline.
• Identifying service defects — reviewing how the statutory demand was served to determine whether there are procedural grounds for setting aside.
• Preparing for the hearing — helping you understand what to expect and how to present your case, including how to respond to the creditor’s arguments.
• If you have missed the 18 days — helping you prepare to oppose any subsequent bankruptcy petition at the hearing stage, using the same substantive arguments.
• Drafting a statutory demand — if you are the creditor, Chris can help you draft a valid statutory demand that complies with the Insolvency Rules and is properly served.

Time is everything with statutory demands. If you have received one, act today.

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Q: What is the deadline to apply to set aside a statutory demand?

A: You have 18 days from the date the statutory demand was served on you. This deadline is strictly enforced and the court has no general power to extend it. If you receive a statutory demand, act immediately — do not wait.

Q: What does “genuine dispute on substantial grounds” mean?

A: It means you have a real, credible reason for saying you do not owe the debt (or the amount claimed). The dispute must not be fanciful or manufactured. The court applies a test similar to summary judgment — is there a real prospect that you could successfully challenge the debt if the matter went to trial? You do not need to prove your case at this stage, but you must show there is something real to argue about.

Q: Can I set aside a statutory demand if I admit I owe the money?

A: Not on the ground of genuine dispute. However, you may be able to set aside on other grounds — for example, if you have a counterclaim that equals or exceeds the debt, if the creditor holds sufficient security, if the demand was improperly served, or if there is some other reason why it would be unjust to allow the demand to stand.

Q: What happens if I do nothing?

A: If you do not pay within 21 days and do not apply to set aside within 18 days, the creditor can present a bankruptcy petition against you (assuming the debt is at least £5,000). You will then face a bankruptcy hearing at which you can still oppose the petition — but your options are more limited than if you had challenged the demand within the 18-day window.

Q: Does setting aside the statutory demand mean I do not owe the money?

A: No. Setting aside a statutory demand only prevents the creditor from using that demand as the basis for a bankruptcy petition. The underlying debt is not affected. The creditor can still sue you through ordinary court proceedings to recover the money. Setting aside the demand protects you from bankruptcy, not from the debt itself.

Q: How much does it cost to apply to set aside?

A: The court fee for an insolvency application is approximately £326 (fees are reviewed periodically — check the current schedule at the time of filing).

Q: Can a company set aside a statutory demand?

A: No. The procedure for setting aside a statutory demand under Rule 10.4 of the Insolvency Rules applies only to individuals (personal insolvency). Companies cannot apply to set aside a statutory demand. Instead, a company that disputes a statutory demand can apply for an injunction to restrain the presentation of a winding-up petition. The grounds are similar — the company must show there is a genuine dispute on substantial grounds.

Q: What if the statutory demand is for less than £5,000?

A: A creditor cannot present a bankruptcy petition unless the debt is at least £5,000 (under s.267(4) of the Insolvency Act 1986). If the statutory demand is for less than £5,000, it cannot form the basis of a bankruptcy petition and should be set aside on that ground alone. However, the creditor can still pursue the debt through ordinary court proceedings.

Q: Can I apply to set aside after 18 days if I only just received the demand?

A: The 18-day deadline runs from the date of service, not the date the demand was issued. If you can show that the demand was served late — for example, because it was sent to the wrong address and you only received it after it was forwarded — the 18-day period runs from when you actually received it. You would need evidence of the late receipt (such as a postal redirection record or evidence that the address used was incorrect). Present this evidence to the court and argue that the demand was not effectively served until you actually received it.

Frequently asked questions

What is the deadline to apply to set aside a statutory demand?

You have 18 days from the date the statutory demand was served on you (not the date it was issued) to file your application at court. The day of service does not count — the 18 days run from the day after. This deadline is strictly enforced and the court has no general power to extend it, so act immediately.

On what grounds can a statutory demand be set aside?

The main grounds under the Insolvency (England and Wales) Rules 2016 are: the debt is disputed on substantial grounds; you have a counterclaim, set-off or cross-demand equal to or exceeding the debt; the creditor holds sufficient security for the debt; or the court is otherwise satisfied the demand ought to be set aside (for example, defective service, a defective demand, or an improper purpose).

What documents make up the application?

Your application consists of an application notice (Form IAA, the Insolvency Act application, or the general application notice form), a witness statement setting out the facts supporting your grounds with relevant documents exhibited, and a copy of the statutory demand itself. The witness statement is the most important document and must be signed by you and contain a statement of truth.

What does setting aside the demand actually achieve?

If the court sets aside the demand, the creditor cannot rely on it to petition for your bankruptcy. It does not make the underlying debt disappear — the creditor can still sue you for the money through ordinary court proceedings — but it prevents bankruptcy based on that particular demand.

What if I have already missed the 18-day deadline?

In most circumstances you cannot make a late application, but you are not without options. You can oppose any bankruptcy petition the creditor later presents (the grounds overlap significantly), pay the debt to remove the basis for the demand, or contact the creditor to negotiate a payment plan.

Is there a minimum debt for bankruptcy?

A creditor cannot petition for bankruptcy unless the debt is at least £5,000. If the statutory demand is for less than that amount, it cannot form the basis of a bankruptcy petition and should be set aside on that ground. There is also a court fee for the application — check the current HMCTS fee for your situation before filing.

Related guides: Form N1 claim form guide · Form N244 application notice guide · All civil court forms