For creditors, debt collection can be a potential minefield. There may be several options available but you could risk wasting more time and money if you pick the wrong one.
Adam Penn, dispute resolution solicitor at Ansons Solicitors in Staffordshire, has over 20 years of experience in debt recovery and advises creditors to consider these questions before starting to chase a debt:
- Is there likely to be a dispute about the amount of the debt? If so, that will have a bearing on the options are available to you.
- Has the debtor got means to pay? If you are unsure, it may be worth investigating the debtor’s means by way of an enquiry agent. It can be very easy to waste money pursuing bad debts.
- Does the debtor have assets in the UK? If they are based abroad it is necessary to consider whether the foreign courts may prove problematic. This is particularly relevant if outside the EU, with Brexit looming large on the horizon.
- Should you issue court proceedings or statutory demand? A statutory demand can be more efficient, but if there is a genuine dispute court proceedings will be needed to obtain a judgment on whether the debt is owed.
- A Statutory Demand is one of the first steps to insolvency proceedings; bankruptcy proceedings for an individual, winding up proceedings for a company. This can involve considerable court fees and if an order is made for a liquidator or receiver to be appointed the debt is then outside of your control. This can also mean limited success for creditors. However, if the debtor is solvent he may be anxious to avoid an order. If insolvent, he may not care. It is sometimes worth threatening insolvency proceedings, including serving a statutory demand.
- Are court proceedings the only option available to you? If the claim is disputed, the likely answer is yes. Debtors can be sued in any court in the country. If the debtor does not defend the claim, you may enter judgment and subsequently enforcement the judgment. If the debtor does defend, and the debt is less than £10,000 it will fall into the small claims procedure at county court. If you win, you may be able to recover your solicitor’s charges for preparing the initial court claim.
For more information on debt recovery, or any other dispute resolution matter, contact Adam Penn on 01543 431196 or email email@example.com.
Ansons Solicitors has offices in Cannock and Lichfield, Staffordshire and Sutton Coldfield by appointment.