Statutory Demand Settlement Agreement: What You Need to Know
A statutory demand is a legal document that is sent by a creditor to a debtor with the aim of obtaining payment for a debt that is owed to them. Once a statutory demand has been issued, the debtor has a period of 21 days to either respond by settling the debt or apply to have the demand set aside. If the debtor takes no action after 21 days, the creditor can apply to the court to have the debtor declared bankrupt or to liquidate their assets.
However, there is another option available to debtors who receive a statutory demand – a statutory demand settlement agreement. This is a legally binding agreement between the creditor and debtor that outlines a payment plan for the debt owed, which is usually paid over a period of time.
The advantages of a statutory demand settlement agreement are many. Firstly, it allows the debtor to avoid bankruptcy or liquidation of their assets. This preserves their credit rating and reduces the risk of losing their home or other assets. Secondly, it allows the creditor to receive payment for the debt they are owed, albeit through a payment plan. This is better than receiving no payment at all through bankruptcy or liquidation.
To enter into a statutory demand settlement agreement, the debtor must first respond to the statutory demand within 21 days and negotiate a payment plan with the creditor. It is important for the debtor to seek professional advice from a lawyer or financial advisor before entering into any agreement, to ensure they understand the terms and conditions of the agreement and that it is in their best interests.
Once the debtor and creditor have reached an agreement on the payment plan, it is important to have the agreement in writing and signed by both parties. This ensures that the terms of the agreement are legally binding and enforceable. The debtor must then begin making payments in accordance with the payment plan, and the creditor must not take any further legal action as long as the debtor is meeting their obligations under the agreement.
In conclusion, a statutory demand settlement agreement is a viable option for debtors who have received a statutory demand for payment of a debt. It allows both the debtor and creditor to avoid the negative consequences of bankruptcy or liquidation, and provides a realistic and practical solution to resolving the debt. However, it is important for debtors to seek professional advice before entering into any agreement, and to ensure that they understand the terms and conditions of the agreement they are signing.