A Statutory Demand is the first step to bankruptcy against an individual which can be prepared and served without any court involvement. Statutory Demands can be served as soon as the debt is due and a court judgement is not necessary. If the claim is disputed, usually by you, the statutory demand can be set aside as the bankruptcy court will halt proceedings if there is any dispute about the sum outstanding. It is relatively straightforward for a debtor to have a statutory demand set aside; it is possible for the process to result in an order for costs being made against the creditor.

Once served, the statutory demand automatically allocates 21 days warning for the debt to be paid. After the allocated period, the creditor is entitled to issue a bankruptcy petition.