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A Guide to Debt Recovery

Posted
May 28, 2014
Debt Collection

Q. Someone owes you money and they won’t pay you…what do you do?  

 A. Well, one option would be to contact your friendly Debt Recovery department to take the case on for you (that’s us, by the way). But what does that entail? Stuart Gumm, paralegal at Crawley based law firm, stevensdrake explains Initially, we will ask for your file of papers so we can see how the monies due to you are made up; these could consist of copies of purchase orders invoices, copies of finance agreements; anything at all which will prove that your debtor owes you the money. The more evidence you have, the better! We are also able to deal with claims where you are not necessarily seeking money, but the return of your goods – you may have lent, loaned or leased them to someone. As a Creditor, under the Limitation Act 1980, you have 6 years from; the date the debt fell due; the date of acknowledgement of the debt from the debtor (which has to be in writing); or receipt of part payment, to bring an action to Court. The moral of the story is, don’t delay - if you have any monies due to you don’t leave it too long to do something about recovering them! If a debtor has entered into an Agreement Regulated by the Consumer Credit Act to buy or hire goods, there are a number of complex procedures that have to be followed.  We will cover those types of proceedings in a later article, but we specialise in Consumer Credit based motor vehicle claims and using carefully selected business partners, can take your case from the issue of a Default Notice through to obtaining a Return of Goods Order, to recovering and de-fleeting the motor vehicle using a High Court Enforcement Officer. Anyway, back to the money you are owed…..A letter before action is the first step (or an LBA as it’s known). 

 This will detail who the Creditor is (the person claiming the money is due, which will be you), the amount that is owed, and what the money due relates to, and show any interest charges being claimed. Court  Pre-Action Protocols recommend that a Creditor allows the debtor at least 14 days to respond. Ok…. so, to summarise, we have sent out an LBA, made telephone calls, and sent a second demand letter, but not received a satisfactory response or payment…the next step is to consider issuing proceedings, but before we do, it is important that we check to see once we have obtained a County Court Judgment (or CCJ as they are known) we have a “means to enforce”.  A lot of people think just because you have a CCJ that the debtor will pay.  

Well unfortunately, they don’t always…in fact very rarely!  Even though technically by not paying, a debtor is in breach of an Order of the Court, you can’t have them arrested or thrown in the Tower (and mores’ the pity!!).  Instead you have to take enforcement proceedings to “enforce” the terms of the Order. It’s then our job to work out the best way of enforcing your Judgment (or, if it is even worth issuing proceedings, unfortunately the old adage “you can’t get blood out of a stone” still holds true!). We will go into more detail of the enforcement options available to you later on, but to summarise, if we know where you debtor works, we can apply for an Attachment of his Earnings, so the Employer pays you direct from the debtors wages. 

If we know your debtor owns their property, we can apply for a Charging Order, securing the debt against the debtor’s property, if we know your debtor has certain assets (such as a nice flash car that he has bought outright, or a big screen TV) we can instruct a High Court Enforcement Officer to take that and sell it (unfortunately this option is not available in some circumstances which we will discuss later). We would not recommend issuing proceedings until we had discussed with you first what we thought the best form of enforcement proceedings would be, what your chances of recovering your money are, and the likely cost to you, and we would make all our investigations prior to issuing the proceedings, so you don’t end up with a CCJ you have paid for, with no way of extracting the money from the debtor. Ok… the next step is the big one… we are going to issue a County Court Claim Form. There will be an issue fee to the Court of anywhere between £35.00 and £1650.00 depending on the size of your claim. After issuing the claim, we will receive a Notice of Issue which will confirm the Case Number that has been assigned to your case, the parties and the Court of issue. A sealed copy of the Claim Form must be served on the Defendant at the address supplied by 1st Class Post along with a Response Pack.  

This response pack consists of a Form of Admission (Form N9A) to allow the Defendant to make an offer of payment and a Form of Defence (N9D) where the Defendant can formally defend the claim, and notes on how to complete them. If the Defendant doesn’t file a Defence or a Form of Admission by the date stipulated, we can request the entry of Judgment in.  

A Claimant can also claim additional Solicitor’s Costs. If a Form of Admission is filed, the Defendant can indicate whether he admits all, or part of your claim, and how he wishes to make payment, and then complete a simple form to confirm his financial details (income and outgoings and other debts owed).  We will then take instructions from you on the Defendant’s offer.  

If the offer is acceptable, we can request the entry of Judgment (you are allowed to request additional Solicitor’s costs) and an Instalment Order will be made – a CCJ payable by monthly or weekly payments. If the Defendant’s offer is unacceptable, we will have to explain to the Court why (perhaps if it is going to take 40 years plus to pay off!) and the Court will consider both the Claimant and Defendant’s position and make an appropriate Order. If a Defence is filed, we will consider whether the Defence has any merits (is it likely to succeed?) – if not we can make application to the Court for Summary Judgment.  We will have to produce documentary evidence to support your claim in a Witness Statement, and deal with each point of the Defence.  There will be a hearing at which we can arrange attendance on your behalf, and if we are successful we will claim the costs involved in dealing with the application, which is usually in the £100’s!  We have quite a high success rate, and it is very rare for a case to become truly contentious.  Most Defences revolve around not thinking it fair a debtor should pay, or not having the money to pay, but to succeed, a Defence must call into question the validity of your claim.  As we always check the merits of your case, this will not happen too often. If we find a Defence does have some merit, we can refer the matter to our Litigation Department, who would contact you to explain the next step, and the likely cost of continuing with your claim. So… that is a brief outline of the steps between instructing us and enforcing a CCJ. Simple? Well, if handled correctly, yes. -ends- This article is provided for general information only. Please do not make any decision on the basis of this article alone without taking specific advice from us. stevensdrake will only be responsible for the advice we give which is specific to you.

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