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Legal Collections – How do you know you need a Law Firm to solve your debt problem?

Posted
April 22, 2016
Debt Collection

This question is not necessarily an easy one to answer. You may be unsure for many reasons, but be churning the question over without settling on an answer, you may be putting off making a decision because you have unanswered questions and don’t know where to find the answers…look no further!

Q: If I instruct a Solicitors to collect unpaid invoices, surely it’s going to cost a fortune?

A:  A common misconception, of course there are charges associated with legal action, both solicitor fees and court fees, but you do get some back, usually around 75% and that’s if it goes as far as acquiring Judgment and Enforcement action, often it will cost you no more than a percentage of the debt as customers tend to react to a solicitors letter and reach agreement before Legal action needs to be taken, sometimes it just needs to change of approach as your customers grow to learn your process and know for how long they can ignore you.

Q: I’ll lose the goodwill of my client won’t I?

A: Always a risk should the process extend all the way to Judgment and Enforcement but if your client is a genuine can’t pay they will address the situation before it get to that stage because a solicitor’s letter tells them you are serious about recovering your money. Any client worth having will not be surprised if you escalate an unresolved matter. It also sends a message to the rest of your customer base that you are confident to take necessary action and not a pushover.

Q: These debts are far too old to collect now, I must have left it too late?

A: You cannot take legal action to recover a debt that has remained unpaid and un-acknowledged for 6 years (5 years if the customer was living in Scotland when the debt was incurred). This is known as Statute Barred debt and the time limit will reset if a payment is made or the customer writes acknowledging it. So if you want to recover your debt legally then you must act within the limitation period. 

Q: If I wait long enough my customer will appreciate my patience and pay something surely that’s better?

A: We understand you want to show forbearance and extend goodwill to your customer but they entered into a contract with you and are now in breach of that. A customer that genuinely wants to pay but can’t, if given the opportunity, will talk to you, explain their circumstances and seek to negotiate a short term, deferred or revised payment plan. A customer who repeatedly makes promises they break, pays less than they agreed, ignores all contact efforts, is a risk to you and your bottom line and the longer you delay in securing your claim to your money the more you risk losing it altogether through bankruptcy insolvency or absconding (a moonlight flit as it used to be called in my day. What can is say? DON’T WAIT!

Q: I’m not sure I have enough documentary evidence to even support a claim so what’s the point?

A: The proposed Pre-Action Protocols have thrown a spotlight on supporting documentation and let’s not forget the requirements as specified by section 78 of the Consumer Credit Act to supply a ”true copy” of any credit agreement them I can see why creditors would pause before pushing the ‘litigate’ button. However a Solicitors experienced in debt recovery will be able to advise, you need only to talk to us and we will tell you what you need. If you have enough evidentiary evidence to allow us to respond to a defence or worst case scenario, a counter claim, we will tell you, if you haven’t we will tell you that too so you’ll know what to do for the future (we have an excellent Business Law Team only too happy to look at your T&Cs)

Q: My debts are consumer and regulated so how can a Solicitors be practicing TCF and exploring affordability if they are taking Legal Action?

A: The new Financial Conduct Authority covers Law Firms with specialised Debt Recovery Teams, this means we must be as compliant as any Financial Institution or Debt Collection Agency, more-so in fact, as we also have to be authorised by the Solicitors Regulation Authority. So worry not about compliancy, customer affordability is fully explored and taken into account….it has to be how else could we tell you what, if any enforcement options are open to you?

Q: My customer has threatened to declare himself bankrupt / insolvent if I push for payment, so what can I do?

A: Sadly people do manipulate their creditors and as much as it is unfair people will continue to do it, some out of desperation simply to gain some respite and some out of spite or simply to avoid their obligations. Ideally you send it straight to your Law Firm who will investigate what assets the customer has and if there is a possibility of successfully recovering the debt legally, if not we can offer assistance is responding and dealing with the insolvency practioner.

Q: My customer appears to have disappeared so I have to write it off…right?

A: Not necessarily, if they were a business there are things you can do such as searching for either the company or the director on company’s house. We can use a professional trace company and desk top searches on the internet, if they can be found they will be.

Q: Won’t using a Law Firm adversely affect my reputation?

A: In short no! Who’s more regulated, experienced and successful than a law firm? What you are saying is we are professional and will deal with you as such!

Q: My debt balances are generally low value so there would be no point would there?

A: A debt is a debt and any balance can be pursued through the right court whether its Small Claims, County or High. Court feed for debts up to £300 are only £25.

If I could say one thing, it’s that when it comes to your company’s bottom line, you need to explore every avenue to collect what you are owed. You can only go so far in-house and a re-brand to a Solicitors can work miracles! Give us a trial….what have you got to lose?

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