When should you consider legal proceedings to recover a debt?

Posted by Natasha Biggs

Associate

All companies will have debts and unfortunately no matter how good your debt procedures are and how efficient your credit controllers are, it is likely that there will come a point when you decide that you cannot recover the sum owed by the debtor. The options at this point are that you instruct a solicitor, or that you start your own claim using Money Claims Online.  If you use the Money Claims Online service whilst it is cheap and potentially cost efficient, it does NOT always help you achieve the result you want; making it a false economy.

In contrast there is a great deal to be said for instructing solicitors to send a Letter Before Action as, in a lot of cases, even one official letter from a solicitor on solicitor headed note-paper, will result in either payment, or the opening of a dialogue about the debt with the debtor. If you do instruct a solicitor, in the vast majority of cases it will produce settlement before the claim is heard at court.

In straightforward debt recovery cases (recovery of monies on undisputed unpaid invoices) a hearing is usually rare because either the debtor won’t defend the claim, or even if the debtor does initially defend the proceedings they will quickly come to an agreement over the debt in order to avoid incurring costs which may be considerable.

Once you have agreement between the parties as to how much one will agree to pay to the other, perhaps the most important and overlooked part of the whole process begins, the agreement needs to be enforced by the successful party. This is because at that point all you will have is a piece of paper (“Court Order”) which says that the debtor MUST pay you the money. Unfortunately, as many people discover, this does not mean that the debtor will simply pay you the money.

Fortunately, there are a number of methods to use in order to enforce the Court Order (whether handed down by the court or agreed by the parties). You can choose one or more of the following:

  • Instruct a High Court Enforcement Officer (to attend the debtor’s premises and attempt to recover monies);
  • Apply for a Third Party Debt Order (which results, if ordered by the court, in monies being removed direct from the debtors bank account); or
  • Apply for a Charging Order (which ends in the sum you are owed being secured against the part of the property owned by the debtor).

To make sure that you utilise the most appropriate and cost effective method you may choose to instruct your solicitor to ensure a maximum chance for recovery of your money.

The best chance of a successful recovery must be to take control of the process as early as possible when facing proceedings. If you do nothing then the chances of a positive outcome are reduced dramatically. That said, action whenever it is taken is better than none at all.

At Furley Page we can offer a FIXED FEE SERVICE for your debt recovery needs and will be happy to discuss your specific problems and then provide you with a bespoke route forward to suit your needs.

For further information please contact Natasha Biggs  on 01634 828277 who will be happy to discuss your individual circumstances.


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