DEBT COLLECTION

How do I get money I am owed by a customer? Why do I have to write to the customer first?

The letter before claim is an essential part to any proceedings and must set out in as much detail as possible the parties involved, the nature of the claim and the actions required. The purpose of the letter is to allow for the exchange of informationand akow for the parties to settle any dispute without the need for proceedings to be issued. The letter must inform the customer that Court proceedings will be started unless the actions required are complied with. You must allow a reasonable time for compliance, and it is possible that a more complex matter may require a longer period for a response, but generally a simple debt claim would require a response within say 7/14 days. The letter is for you both to "set your stall out" and each of the parties must be able to put their position out fully in the correspondence. Everyone is encouraged to use an alterative method of dispute resolution instead of going to Court, but there are some cases where Court proceedings will be inevitable. A carefully drafted letter may be the best method of resolving the dispute.

If the debt is not paid, you can:

* issue proceedings in the County Court

* Serve a Statutory Demand under the Insolvency Act, requiring that the debtor pays the debt within 21 days.

What is a Statutory Demand? ("SD") and how do I use it?

If there is no defence to the claim, it is advisable to serve an "SD". However, this approach is only effective, if it is believed that the debtor will pay and that belief turns out to be correct.

If the "SD" does not result in payment, the next step is to petition to the Court for the debtor's winding up (for companies)  or bankruptcy (for individuals), which is costly and usually fruitless. The debt must be over £750. Serving the "SD" is accordingly no guarantee that the debt will be paid, and there are different procedures for claims against companies and claims against individuals.

Company 

A "SD" must be served upon the company at its registered office by first class post or personally leaving it at that address. Evidence of service must be presented and it is always recommended that that personal service is effected. If the company has not paid within 21 days, a winding up order can be issued.

Individual

Must be served personally and the individual has 18 days to apply to have the "SD" set aside (if there is a defence), or 21 days to pay the debt. If it is not paid within 21 days, a bankruptcy petition can be issued.

When do I use the County Courts? What is the difference between the "SD" and th County Court?

If there is likely to be a real dispute orwhere a potential defendant appears to have an arguable defence to the claim, then the most effective way to use your resources is to have the claim decided upon by a judge in either the County Court or the High Court. The difference is really about the amount of the claim and/or any complex issues that might arise.

Although you can use the County Court for very large claims, if the claim is above £50,000 and complex issues may be raised, then the High Court should be used. Inevidately, the process can take a long time and the High Court will be much more expensive.

Although it is posible to obtain judgment in default, if a defendant does not reply to a claim within 14 days, it is possible to have the judgment set aside if the defendant can show a good arguable defence. This ill incur the defendant in costs and could be used to negotiate a settlement.

If the defendant acknowledges service of the claim, they have 28 days to file a defence; and if they do not file the defence in time, judgment can be entered.

Key differences

The difference between the above procedures is not only cost, but time as well. The "SD" procedure looks easier and cheaper to begin with, but may become very expensive if disputed, or a petition is applied for, as the court cost can be high. but even when judgment is entered

By contrast, even the most straightforward claims in the County Court may take many months to resolve, but even when judgment is eventually entered, enforcement proceedings may be necessary if the defendant does not pay.

It is always advisable to make enquiries to ensure that the defendant is worth issuing proceedings against, and we can assist in these matters.

Can you guarantee that you will recover my money?

No! No reputable collection agency can offer that guarantee, but if we are unable to collect it - no one can.

Do I have to pay you any money up front and how much will it cost me?

NO and ABSOLUTELY NOTHING! As we offer a strictly  "no collection no commission" service, Costs are only incurred if it is necessary to issue legal proceedings, and this will not be initiated until we discuss it with you, and receive confirmation of your instructions.

Do you have to issue legal proceedings?

No! In most cases, we recover your accounts without the necessity of using court action.

How long will it take before I receive my money?

Regrettably there is no fixed time scale for recovery. It is not unusual to recover your account within two weeks, but if legal proceedings are involved, it has taken in a few cases, 18 months. 

Can I claim your charges from my debtor?

Only if recovering charges from a defaulter are in your terms and conditions. However, if you do not have any terms and conditions, we can advise you in formulating them.

Can I claim your charges if they are then put in my terms and conditions?

No, as you are bound by the terms and conditions that were in force at the time of the transaction or contract.

Can I claim interest?

Again, only if it is in your terms and conditions; but it still may be possible under The Late Payment of Commercial Debts Interest Act, which is currently at 8% above Bank of England base rate. However, if the claim requires court action, you can claim interest under the County Courts Act 1984, which is 8%. These interest rates are as at December 2011.

If it is necessary to issue legal proceedings, do I have to attend court.

Not if the claim is undefended. If it is defended you may be required to attend court. We will then prepare all the papers required and advise you throughout.