Collecting Debts – The basics that every business should know


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.

I am owed money, what can I do?

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?

I have contacted the debtor but cannot make progress, when should I instruct solicitors?

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.

Does my solicitor need to send a letter of claim?

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. 

What happens if the pre-action protocol letter is ignored?

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.

How much will it cost to issue County Court Proceedings?

This depends on the amount of the debt, there is a Court fee payable in the MCOL as follows:

  • Does not exceed £300 = £25
  • £300 to £500 = £35
  • £501 to £1,000 = £60
  • £1,001 to £1,500 = £70
  • £1,501 to £3,000 = £105
  • £3,001 to £5,000 = £185
  • £5,001 to £10,000 = £410
  • £10,001 and above = 4.5% of the value of the claim

What are my solicitor’s costs for bringing proceedings and are they recoverable?

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. 

Can I claim interest on the debt claim?

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.​  

What if the debtor disputes the claim?

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.​  

I have obtained judgement, but the debtor has not paid. How can I enforce?

There are a variety of enforcement methods against the debtor. The most common enforcement procedures are:

  1. Instructing a County Court Bailiff to seize possessions to the value of the debt
  2. Securing the debt by way of a charging order on the debtor’s property
  3. Obtaining an order that the employer deducts wages and pays direct to the creditor until the debt is satisfied

There are other debt collection enforcement procedures but these are the most commonly used. Your solicitor will advise on what is most appropriate.​

Is it worth bringing County Court Proceedings against a debtor?

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.​

How can I investigate the financial status of a debtor?

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.​ 

More information

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.


Popular Insights

Footer bg

Would you like to know more?

For help and advice, talk to a member of our team. They can advise on the best options in your matter.

Call: 01708 229 444 Email us


Portfolio Builder

Select the legal services that you would like to download or add to the portfolio

    Download    Add to portfolio   

    Remove All


    Click here to share this shortlist.
    (It will expire after 30 days.)