Commercial Debt Recovery
Introduction
Cash flow is the lifeblood of any business and effective debt collection procedures can keep that blood flowing and your business healthy.
Most businesses will have, from time to time, certain debtors who have not provided a satisfactory explanation as to why payment of invoices has not yet been made. In such cases it is important to take active steps to collect the debt before it becomes too old and turns "bad".
Pre-action Steps
The first step is to send a letter threatening Court proceedings. The letter should include a copy of the invoice(s) or a statement of account, so the debtor can be sure of exactly what you are asking him to pay.
Taking action in the County Court
The majority of money claims proceed through the County Court.
Before Court proceedings are commenced, it is vital to establish: -
· Whether the debtor is already subject to bankruptcy or other insolvency proceedings.
· Whether the debtor has sufficient assets against which to enforce a
Judgment.
· Whether it is cost effective to continue to pursue a debtor, given the size of
the debt and the likely legal costs to be incurred.
The Court proceedings are started by completing a Claim Form and sending it to the Court office along with the Court fee. Interest can also be claimed.
If the debtor does not reply to the Claim Form within the specified time limit then a Request for Judgment can be made to the Court. If the Claim is defended then further Court fees are payable and the matter will proceed to trial unless settlement terms are agreed with the debtor in the meantime. Mediation may be appropriate when claims are defended.
Enforcement of the Judgment
Once the Judgment has been obtained from the Court and if the debtor is still reluctant to pay up, the following options are available to enforce the Judgment: -
· The Bailiff or Sheriff can be instructed to execute the Judgment by seizing the debtor's goods.
· A Charging Order can be obtained over land or property belonging to the
debtor.
· A Third Party Debt Order can be obtained against a third party who owes money to the debtor.
· You can ask the Court to make an Order for Oral Examination.
Ashfords solicitors debt recovery team provide a pro-active service to quickly and cost effectively convert your debt to cash flow and improve your bottom line. We offer a range of fixed fee and bespoke services.
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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