1. LETTER BEFORE ACTION
In all but the most exceptional cases, the debtor should be notified in writing that proceedings are to be taken against them.
We give all debtors fourteen days in which to make payment of the debt, and we inform the debtor that we will issue proceedings if no payment or contact is made within that period. We give fourteen days because that is the period prescribed by the Ministry of Justice in the Pre Action Protocol, and breach of that protocol can carry penalties at court.
All creditors may include a claim for interest in their debt recovery procedure. If there is an interest clause in your Terms and Conditions of business the rate specified therein can be claimed. If there is no specified rate then interest and fixed fees can usually be claimed under the Late Payment of Commercial Debts (Interest) Act 1998 for business debts.
If no satisfactory response or response at all is received from the debtor, a County Court claim can be issued.
2. COUNTY COURT PROCEEDINGS
When issuing proceedings, we will tell the court by way of the particulars of claim that there is a contract (written, oral or implied) in place between you and the debtor, that the debtor has failed to pay in breach of that contract and that money is owed to you as a result. We will sign a statement of truth on your behalf to this effect. It is vital, therefore, that you let us know if the circumstances are not as we have described.
Claims for debts under £10,000 (for the recovery of money only) will usually be allocated to the small claims track of the county court. The court fees are fixed on a sliding scale based on the amount of the claim (including interest) and these costs are claimable from the debtor in a successful claim. Furthermore, there are fixed legal costs involved, and these are also claimable from the debtor in a successful claim.
The address to which the proceedings will be sent will be the address you provide to us.
If the debtor fails to respond within 14 days from the date on which the proceedings are deemed to be served on them, it is possible to apply for a county court judgment. There are fixed legal costs involved at this stage, which are also claimable.
If the debtor acknowledges service of the summons but fails to enter a Defence within the given time limit (28 days from the date of service) it is possible to apply for judgment as above.
Default judgment will be entered on a register of judgments and will affect a debtor’s credit rating. This will last for six years (unless satisfied during this period) and enforcement action can be taken at any time within the six years.
If the debtor files an admission, an offer will usually be made as to payment terms. You can either accept these payment terms or ask the court to determine the terms of repayment.
When judgment is entered against a debtor it is not always necessarily the case that a debtor will automatically make payment. Therefore it may be necessary to take further Court action in order to enforce payment.
Further information on methods of enforcement is in our Dispute Resolution Guide which will be provided to you upon instruction.