Our experience shows that the sooner a debt is pursued the greater the prospects of recovery. We aim to act as an extension of your own credit control process. We communicate with you via e-mail wherever possible.
Click here to see the relevant court fee applicable to debt recovery and enforcement.
Click here to see a procedural illustration.
Individuals and Partnership Debtors
An initial 14 day letter before action ("LBA") is sent out to the debtor demanding payment of the amount owing and asking the debtor to set out any reasons why the debt should not be paid forthwith.
The following searches can me made and we can report to you the result of the searches shortly after the LBA being sent.
A Bankruptcy Search is made to see if the debtor is bankrupt or has any outstanding bankruptcy proceedings issued against him/her.
A Search of the Register of County Court Judgments is made. This will tell us of any Judgment debts already outstanding.
Office Copy Entries are obtained to show us if the property to which we are writing is owned by the debtor.
If no response to our LBA is received then there are 2 options open, either serve a Statutory Demand or issue County Court proceedings. If no dispute as to the debt is raised then service of a Statutory Demand is appropriate:
Service of a Statutory Demand
A Statutory Demand has to be dealt with within 21 days by the debtor failing which we can issue a Bankruptcy Petition. Personal service of the Statutory Demand is generally more effective. This procedure can only be used where there is no dispute as to whether the money is owed or not.
If a dispute is raised the Statutory Demand should be withdrawn. The debtor can apply to set it aside if it is not withdrawn. County Court proceedings can then be issued. If the debtor does not pay or set aside the Statutory Demand we can then issue a Bankruptcy Petition.
The cost to issue a Bankruptcy Petition is £700. An Affidavit confirming service of the Statutory Demand and an Affidavit verifying the Petition are required.
Once the Petition is issued it has to be personally served on the debtor and a Process Server's fee will be incurred. The cost will depend on where the debtor is and whether service is effected on the first attendance.
The Court on issue will fix a hearing date. The debtor then has a limited time to pay or he will be made bankrupt. If the bankrupts assets are sufficient the debt will be paid out of them.
Issue of County Court proceedings
This is the only option where it appears the debt will be disputed.
This is commenced by issuing a Claim Form and Particulars of Claim setting out details of how the claim arose. The Court fee will depend on the amount claimed but is between £35 and £1,670 (April 2011).
The Defendant (the debtor) then has 14 days in which to file an acknowledgement of service with the Court. If he fails to do so Judgment in Default can be applied for and the Defendant then has 14 days to pay the amount of the debt before we can commence enforcement proceedings.
If the Defendant files an acknowledgement of service indicating that he intends to defend the claim he then has a further 14 days in which to file his defence. The claim will then proceed as a defended action.
If the amount of the debt is under £5,000 it will be dealt with as a small claim and the Court will allocate a hearing date. The hearing will be informal and the usual procedural rules will not apply. Full costs are generally not awarded in a small claim and only the Court fee and Fixed Costs will be recoverable in addition to the amount claimed.
If the amount of the debt is over £5,000 then the claim will be allocated to a Track and the formal procedural rules will apply relating to disclosure, witness statements, expert evidence. It is likely to be 9 - 12 months before the matter comes to Trial. Costs will be awarded to the successful party. Enforcement of County Court judgments
Once Judgment is obtained if the Defendant fails to pay the Judgment debt then the enforcement options are:
Service of a Statutory Demand in respect of the Judgment debt (procedure as set out above will apply)
Warrant of Execution - An application is made to the Court for the Bailiff to attend at the Defendant's property to obtain goods to the value of the amount owing. If the debt is over £5,000 then the matter has to be transferred to the High Court for enforcement. The Court fee will be £100 and in the case of the High Court, a Sheriffs fee is also payable.
Application for an Order requiring a Judgment debtor to attend Court to provide information in connection with enforcing the Judgment (formerly an application for an oral examination). The Court fee is £50. This is useful to obtain as much information amount the debtor as possible and if they are working which would assist in applying for an Attachment of Earnings Order.
Attachment of Earnings Order - An application is made to the Court for the employer to make deductions from the Defendant's earnings which are paid into Court until the Judgment debt is paid. The cost of the application is £100.
Third Party Debt Order - An application is made to the Court where it is known that money is owed by a Third Party to the Judgment Debtor. The cost of the application is £100.
Charging Order - An order which secures payment of the Judgment debt on the debtor's property and if the debt remains unpaid a further application to the Court may be made for an order for sale of the property. The interest of other creditors will be considered by the Court. The Court has a discretion as to whether to order a sale or not and will consider any joint owners rights. The Court fee is £100.
An initial LBA is sent as for individual / partnership debtors.
We can carry out a company search to ascertain if the company still exists and any defaults re company law requirements.
If the debt is disputed then we will proceed to issue County Court proceedings (see above).
If there is no dispute to the debt then we will proceed to serve a Statutory Demand (see above) and then issue a Winding up Petition.
We are able to recovery interest on most debts pursuant to the Late Payment of Commercial Debts (Interest) Act 1988, which is currently 8% over the base rate.
Some businesses have a contractual term in their terms and conditions which may provide for a different rate of interest, in which case the contract prevails. In addition pursuant to Section 5A of the Late Payment of Commercial Debts (Interest) Act 1998, a statutory sum can be charged in addition to the interest. These are as follows:
For a debt less than £1,000.00 the sum of £40.00.
For a debt of £1,000.00 or more but less than £10,000.00 the sum of £70.00.
For a debt of £10,000.00 or more the sum of £100.00.
Winding up Petition
We search the High Court Central Register to see if any prior Winding up Petition has been issued or pending.
The cost to issue a Winding up Petition is £1,165 (June 2011). An Affidavit verifying the Petition is required and the Oath fee is £7 - £10. The Memorandum of Association of the company will need to be obtained for which Companies House charge a small fee.
Once the Petition has been issued it will have endorsed on it the hearing date. It then has to be served personally on the Company at its registered office by handing it either to a person who is a Director, officer or employee of the company who is authorised to accept service. A Process Server will need to be employed to effect personal service and the cost of such will vary, dependent on where the registered office is and whether the Process Server is able to serve the Petition on the first visit.
Following service of the Petition it has to be advertised in the London Gazette not less than 7 business days after service of the same or not less than 7 business days before the hearing. The cost of placing the advertisement is £57.30 (May 2011).
The Hearing of the Petition will take place in the High Court and if it is necessary we will instruct a Barrister to attend.
At Pinney Talfourd LLP, we recommend that where possible the Statutory Demand procedure then issue of a Bankruptcy Petition or Winding up Order is the quickest and most effective route to payment.
If the debtor has the ability to pay and there is no dispute this method generally results in settlement of the debt.
For advice on debt recovery please contact a member of our Litigation and Dispute Resolution Team who will be happy to advise clients without obligation with a view to arranging an initial consultation on terms to be agreed.
Pinney Talfourd LLP is recognised by the Legal 500 2013, as one of the leading firms in Essex for debt recovery.