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Court action to collect a debt

Generally, it is possible to recover debts reasonably quickly by using relatively informal processes.  Often, this is about making sure you are talking to the right person in the debtor organisation, and finding an approach which will make them want to pay you more than they want to use the money for anything else!

Sometimes, of course, the unfortunate debtor may be facing real difficulty, such that they simply cannot raise the cash to pay you, whatever action you may take.

But from time to time, we all face the recalcitrant who, for whatever reason, decides to brazen it out and simply refuses to pay up.  So what’s the strategy then?  What is the “Z” in the “A to Z” of debt recovery?

In these circumstances, you need to weigh your options carefully.  Is the customer so valuable or influential that you are simply prepared to ride with it?  Or do you think it best to give a clear signal that you are not to be messed with?  If the latter, it may be appropriate to take action through the court system, sooner rather than later.

Generally, these days, court action can be initiated by the creditor online.  The court will charge a fee based on the amount you’re claiming, plus interest.  It will be quicker and cheaper to make a claim online rather than filling in written forms.  Fees are tiered according to the level of debt, from £25 online (or £35 using a written claim) on a debt up to £300, to £815 online (or £910 via the written procedure) for debts between £50,000 and £100,000.

You may be able to claim the costs back if you win the case.  However, the judge might not award you costs if they think you’ve made no effort to agree out of court.  (In this context, there is a mediation service available).

You can also claim “statutory interest” on the money you’re owed, at a rate of up to 8% plus the Bank of England base rate (unless there’s a different rate of interest specified in the contract from which the debt arises).

The person or business who owes you money must respond to your claim within 14 days of receiving it.  If they don’t, you can ask the court to order them to pay.  Again, this can be done online.  Or you can, of course, tell the court you’re withdrawing your claim if the debtor pays you, or makes you an offer you’re happy with.

You may have to go to a court hearing if the debtor says they don’t owe you any money, or they disagree with the amount.  However, if your case is a small claim – under £10,000 – it may be dealt with without a hearing, using written evidence.

If there is a hearing, you can represent yourself, or pay for a solicitor to represent you, or ask someone else to speak on your behalf (although you must get the court’s permission for this).

If the court confirms that the debt is payable to you, you can ask them to:

  • use bailiffs to collect the money  –  if the debt still isn’t paid, the bailiff will visit the person’s place of business or home to see if anything could be seized and sold to pay the debt;
  • place a charge over the debtor’s assets, so if they are sold the money must be used to pay you;
  • in the case of an individual, send an order to their employer to take money from wages to pay the debt.

For more information, click here.

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