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Legal Collections – Court Fee increases- who benefits?

June 25, 2015
Debt Collection

In April the Ministry of Justice (MOJ) increased court fees for Money Claims, representing the first phase the MOJ are seeking to increase after consultation, and don’t forget, this is just the first part of the of the civil proceedings changes, called ‘cost recovery’. The second part ‘enhanced charging’ has yet to be published. Whilst the Law Society publicly and vociferously opposed the increases and sent a detailed response, there has been little in the way of public follow up, although I’m sure the good fight continues behind the scenes!

So, who benefits? Well the immediate assumption would be the Government, price increases equals immediate increased profit, right? Well actually no, there is a bit of give and take in what has been rolled out. Low value claims still offer the creditor value for money in that the tiered pricing structure remains largely unchanged and ensures fees do not exceed the claim value, thus ticking the box on proportionality…well to issue at least, yes. But as we all know, issuing is just the start, and fees can soon rack up if further hearings and applications need to be made.

So the establishment benefits from claims greater than £15,000 the most, this is where a fixed fee has been abandoned in favour of a percentage value of the balance, meaning those with most to lose have most to pay if they wish to attempt, and let’s face it, not guarantee recovery. Not ideal for a small business caught out by an unscrupulous customer. His road to reimbursement will not be smooth or cheap. On the plus side we all can focus better on early collections and not let a debt spiral out of control, whether through lax practice or more usually, goodwill and trust.

There is a school of thought that accessibility to legal collections has been decreased, that low to middle income people and small businesses will not be able to fund necessary action, that it will become the preserve of the elite. I don’t know about that, though it’s true that whilst keeping issue fees relatively unchanged for low balance debts, there have been hikes in subsequent hearing costs which may make completing the process cost prohibitive, which is why it makes sense to engage an experienced law firm to partner your collections process.

I know just such a firm... happy to talk!!

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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