Debt Recovery
As a business, it is essential for you to receive prompt payment for all goods, services and work carried out. Unpaid debts can affect cash flow and could potentially have long-lasting repercussions.
Whether a single amount or a schedule of outstanding debts, our team of experts are here to help. We understand that every case is different, and our team will take the time to fully understand your situation before advising on the necessary steps to recover the money owed.
What Is the Debt Recovery Process?
The debt recovery process can vary depending on the situation, but generally, the stages are as follows:
- Send a letter of claim to your debtor (pre-action letter)
- Issue court proceedings
- Obtain a County Court Judgment (CCJ)
The first stage of recovering any outstanding debts owed to you is to send a letter of claim (also known as a pre-action letter) to your debtor. This is a requirement of the Court’s Practice Direction and there may be financial consequences if one is not sent. We will send this on your behalf, and it will inform the debtor of the amount they owe, when to make payment by, and the consequences of non-payment. The time limit for a response is 14 days for a debt owed by a business and 30 days for a debt owed by a consumer/individual.
If there is no response to the letter, the next stage is to issue court proceedings. We will draft a Claim Form on your behalf. The court will then issue the claim and serve the defendant.
If the defendant files a defense with the court, the matter will be handled by our highly regarded dispute resolution team.
If the court proceedings are not defended, then we will obtain a default judgment on your behalf. The court fee and a small contribution towards your legal fees are recoverable from the debtor. Once the judgment is granted, it will be registered and affect the credit record of the defendant if payment is not received within 28 days.
What if the Debtor Does Not Pay?
If we obtain a CCJ on your behalf but the debtor still does not pay, we can advise on the options you have for enforcement. These include:
- Attachment of earnings. This is where the money will be deducted directly from the debtor’s wages.
- Charging order securing the debt against a property
- Instructing the High Court Enforcement Officer. This is usually a highly effective way of enforcing the Judgment debt as most debtors pay to avoid having their possessions removed and sold.
As an alternative to obtaining a County Court Judgment, it is possible to serve a Statutory Demand. This comes before bankruptcy for an individual or winding up for a company and is a very powerful threat that often results in payment. However, it can only be served if the debt is undisputed.
How Much Will the Process Cost?
We offer a fixed fee service for straightforward debts which is a low cost and efficient way to recover debts of up to £10,000.
Sending a pre-action letter
For a debt worth:
- Up to £1,000: £100 + VAT
- £1,001 – £5,000: £130 + VAT
- £5,001 – £10,000: £160 + VAT
If our pre-action letter provokes a response from the debtor and we enter into negotiations or correspondence on your behalf, our fixed hourly charging rate of £220 plus VAT will apply. This rate will also apply to any defended Court proceedings.
To issue Court proceedings – £200 + VAT + applicable Court fee
To enter default Judgment – £50 + VAT
If Court proceedings are not defended, we will obtain a default Judgment on your behalf for just £350 to £410 plus VAT plus the Court fee. The Court fee is based on a sliding scale depending on the value of the debt. It can range from £35 for a debt of up to £300 to £455 for a debt of £10,000.
We are able to offer a fixed fee for preparation of a Statutory Demand of £300 plus VAT & there is a process server’s fee for service of it of approximately £120 to £180 plus VAT. If the debtor does not pay, we will discuss with you the possibility of bankruptcy or winding up and the costs involved.
