We draft and prepare in house, claims to be issued in County Courts and also in the event of a claim being defended; we are able to prepare a defence which will include drafting and preparing Witness Statements, exchanging documents with the debtor or their solicitor, and forwarding same to the Court.
We are able to offer advice on enforcement procedures, and follow this through to settlement.
We also advise on the benefits of Statutory Demands, and draft and prepare same on information supplied by our Clients.
In the first instant, you should avoid litigation, if possible, but, at times, this is easier said than done.
Statutory Demands – what are they?
A Statutory Demand is a legal instrument under the Insolvency Act, which can lead to an individual being made Bankrupt, or a company being wound up if the debt is over £750.
If you demand a sum of money from anyone, you must first of all ascertain that you are owed the money, and most important, there are no disputes.
When a debtor receives a Stat. Demand, and they dispute the debt, they must make an application to set it aside within 18 days, or they could be made Bankrupt, within 21 days.
The main failure of Statutory Demands, is when they are served upon a body, the Defendant only has to say, that the debt is disputed, and the Demand will be set aside.
No statutory fees are payable on issuing a Statutory Demand, but there are on Bankruptcy Petitions and Winding Up Petitions, and the only costs for a Statutory Demand is the preparation and drafting, and the service of the papers.
However, it must be noted that the only other further procedure available, after serving a Statutory Demand, is to issue a Bankruptcy or a Winding Up Petition; and we are experienced in drafting and preparing the correct forms, if required.
County Court Claims (1)
It is far cheaper to claim a sum of money in a County Court than the High Court, and much easier. However, a District Judge may instruct you to transfer the claim to the High Court, if it is complicated or there are points of law that may be required to be challenged.
Although it is possible to issue proceedings for sums in excess of £100,000, there are different tracks that need to be followed, depending on the sum claimed.
In the first instant, a Claim Form will have to be prepared and drafted, but it is important that this is done correctly, or the Judge may throw it out to be re drafted.
Either the Claimant’s address or a solicitors address should be put on the claim form for service of papers, but I usually put the Claimant’s name with my address on it, but I have had it in the past, occasionally, when a judge has insisted that the Claimant’s address should be on the Form, and they have quoted a Civil Procedure Rule.
The statutory fees payable are on a scale and are added to the claim. The claim should also include interest at either:
- Pursuant to your terms and conditions or
- Statutory interest at 8% or
- Interest, and compensation, under the Late Payment of Commercial Debts Interest Act, if it is a commercial debt
Interest is charged from when the debt was due, to Judgment being entered.
The Court will then send a Notice of Issue, which will include a date to enter Judgment. This will be 14 days from when the claim was served upon the debtor.
The debtor will have 14 days from date of service to either pay, or enter a defence. If the defendant files an Acknowledgement of Service, they will then have 28 days to enter and file a defence.
When the Court has received Notice of a defence, they will forward an Allocation Questionnaire to both parties. The claimant must file this within a certain date, and depending on the sum claimed, they will also be asked for a further fee. I will add that all statutory fees that are paid are added to the debt, if the judge finds in your favour.
Documents, such as contracts, copy letters, terms and conditions must be forward to the court, and the defendant 14 days before a Hearing date, which will be notified after the Allocation Questionnaire has been filed. A Witness Statement must be included with the papers, which must contain a Statement of Truth with the correct wording.
County Court Claims (2)
If you are successful with a claim, interest will be added to the date of Judgment which will be the Hearing date.
Any of you who have taken proceedings against anyone will know that this procedure is only to prove the debt; it has nothing to do with collecting your money.
Enforcing a Judgment
There are several ways to enforce a Judgment, none of which guarantee that you will get paid. They are:
Using a County Court Bailiff to serve a Warrant of Execution is one. The fee is added to the debt, but we have not found this method very effective, although the Bailiff is empowered to remove goods and sell at a public auction.
Apply for, what used to be known as an Oral Examination, but is now called “Application for order that debtor attend court for questioning” or “Application that Officer of Company attend court for questioning”, and they will have to complete a Statement of income and expenditure. The Court will then fix a figure for them to pay per month to settle the Judgment sum. In the case of an individual, the Court will determine a net figure that an individual must be left with at the end of a month, and any deduction must not leave a debtor with less than that sum.
If the debtor is an individual and you know where they work, apply for an Attachment of Earnings Order, which will first follow the same as an Oral Examination, but then an Order will be made for the employer to deduct the sum per month from the debtor’s salary or wages, and forward to a department dealing with A.E. Orders. They will then forward the money to the Claimant. If a debtor changes employment, you will have to trace their new employer to transfer the Order to them.
Under a ‘third party debt order’ money owed to the Judgment debtor is paid directly to the creditor from their bank or building society account.
Under an ‘attachment of earnings order’ money is stopped from the Judgment debtor’s wages to pay a debt, if the debtor is employed.
Placing a “Restriction” turns an unsecured debt into a secured one. Under this order a Restriction is placed on the Judgment debtor’s property (usually the debtor’s home if the debtor has the Judgment entered against him or her personally, and only on their share of the property) to the value of the debt owed to the Judgment creditor. If the property subject to a Restriction order is sold, the full amount of the charge (i.e. the outstanding debt) has to be paid before a purchaser would consider buying the property.
If a Judgment is over £600, it may be possible to transfer the Claim to the High Court for enforcement. The cost is approximately £100, and there is no other fee, as the High Court Enforcement Officer, previously known as under Under Sheriffs will collect their fee from the Debtor, if it is collectable. If, however the debt is uncollectible, they will currently charge a fee of £60 plus VAT. The Enforcement Office will hold money for 14 days, under the Insolvency Act before passing the money over. However, they will deduct their fees first, and continue collecting until all your money has been received. As the rules regarding enforcement changed on 6 April 2014, any use of an Enforcement Officer must comply with the new rules.
At the beginning of this section, I stated that you must avoid litigation, if possible, and now you know why. Negotiate, or instruct me to negotiate, accept lower settlement sums, but avoid litigation if at all possible.