Is your business owed money? Whatever the size of your company, just a few bad debtors can put a real strain on your business. We look at what you can do to recover debts yourself and when you should call in a lawyer.
The obvious first step is to contact the debtor asking for payment. Find out why they have not paid you. Is it because they do not have the money to pay you? Do they dispute the claim? Or are they just ignoring you?
The sooner you instruct solicitors the better. The older a debt is, the harder it is to recover. If you are a business and your Terms & Conditions have been breached in terms of payment time, you should take action as soon as you can after payment terms have expired.
If there are no relevant Terms & Conditions, or if it is a private debt, you should consider instructing professionals to assist you as soon as it becomes apparent you are no longer making progress.
Our Commercial Litigation Team specialise in debt recovery and will be able to advise on each individual case.
Yes. There is a debt collection protocol which requires that a comprehensive letter be sent setting out all facts in support of the claim and giving 30 days for a response.
County Court proceedings can be issued with a view to obtaining a judgment against the debtor for the amount of the claim. Pinney Talfourd utilise the HM Courts & Tribunals Service platform Money Claims Online (MCOL) to issue proceedings electronically for speed and efficiency.
This depends on the amount of the debt, there is a Court fee payable in the MCOL as follows:
You will need to be advised in each individual matter by your solicitor. In non-disputed County Court claims only fixed costs are recoverable which are nominal payments far less than actual costs incurred.
Yes. Interest can be claimed in accordance with your Terms & Conditions or at the County Court default rate. Again you need to be advised by your solicitor on interest claims.
A disputed claim means that the matter will have to go to trial to be determined by a judge. If the claim is less than £10,000 it will be a small claim hearing. If more, it will be a fast-track or multi-track hearing. There are different cost consequences depending on the value of the claim. Your solicitor will assist you on this.
There are a variety of enforcement methods against the debtor. The most common enforcement procedures are:
There are other debt collection enforcement procedures but these are the most commonly used. Your solicitor will advise on what is most appropriate.
The question depends on whether the debtor has any funds, property or assets that can be enforced against. A debtor who has no income and no assets will not be worth taking proceedings against.
Our Commercial Litigation Team can carry out property searches to check for property ownership and for previously registered judgement debts. Any more specialist financial investigation would be carried out by a specialist private investigators. Our Commercial Litigation Team work with such experts and can recommend appropriate investigation firms.
Stephen Eccles is a Partner and Head of the Dispute Resolution Department, who are recommended by Legal 500 UK for their debt recovery services.
Within this department, Nick Hatchett is Head of the Commercial Litigation Team and offers specialist debt recovery services to businesses. Nick’s advice is to contact the debtor directly in the first instance saying, “Sometimes misunderstandings can be cleared up without recourse to legal action and being even further out of pocket. However, seek the advice of a professional as soon as it becomes apparent that they cannot or will not pay as timings can be critical.”
Contact our Commercial Litigation Team for more information.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.