It’s an all too familiar scenario. A family uses a credit card to purchase life’s little luxuries – perhaps a new television or overseas holiday? Pretty soon, the credit card bill edges higher. Or perhaps a family run business has a month or two downturn and is suddenly unable to pay its creditors. Soon, you’re chased for payment. If you receive letters of demand, Statements of Claim or a Creditor’s Statutory Demand for payment, it is critical you respond promptly. Failure to do can see events take a definite turn for the worse if you ignore key legal documents. We set out below some case studies of what can happen if you bury your head in the sand, and choose to ignore your creditors.


The Sydney Morning Herald recently published a case study on a Melbourne family who were forcibly evicted from their house for failing to pay a $20,000 credit card bill. They stopped paying the minimum payments and started receiving letters of demand and other legal documents, which they chose to ignore. The credit card debt was sold to debt acquisition companies, who eventually pursued them via bankruptcy. The self-represented couple decided to appeal their bankruptcy and unfortunately lost. Throughout the appeal process, the trustee was incurring considerable legal costs. Suddenly the $20,000 credit card bill was now a total bill exceeding $290,000. And the couple lost their house. Ironically, had they acted before bankruptcy, they had the funds to pay their credit card bill.


If your company is served with a statutory demand, immediate action is required. A statutory demand is a formal, verified demand issued under the Corporations Act 2001. For example, a company receives a creditor’s statutory demand for payment of a debt exceeding $150,000, and a separate Statement of Claim for around $20,000. The Company’s business took a downturn towards the end of 2015. However, has since started rebuilding and employing more staff.

The Creditor’s Statutory Demand has expired. If a demand is issued and served and the company fails to pay the debt within 21 days from the date of service or fails to make arrangements to pay the debt, the company is presumed insolvent. The time frame is strictly enforced.

So, what can the Company do? At this point, their options are limited. There is a presumed insolvency, and now a creditor can use this to make an application to the Court to wind up the Company. Obviously, this is not great news for a Company having an upturn and regathering momentum.

Had they responded promptly to the statutory demand they could have sought to enter into a formal debt payment plan or have the statutory demand set aside through an application to the Court.

The Uptake

Both of these cases serve as a warning – unless you are an ostrich, burying your head in the sand and ignoring deadlines will be to your detriment. Swift action is needed to keep your options open. If you do receive court documents, you should seek immediate legal advice. Importantly, if you are unsure how to move forward, let LegalVision’s dispute resolution team know your questions by calling us on 1300 544 755 or by filling out the form on this page.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Emma George
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy