Debt Recovery Solicitors

There is a fine balance to strike when deciding whether to pursue a debt. On one hand, not all debts may appear to be worth the time or money to pursue. However, on the other hand, you do not want to set a precedent that allows your customers and clients to take advantage of you.

As part of our debt recovery service, we can provide advice on whether it is commercially realistic to pursue a debt and your options for proceeding. In most cases, we can engage the debtor in settlement discussions for a reasonably proportionate cost.

If it becomes clear that the debtor will not pay or engage in negotiations, we can provide further advice about starting legal proceedings, the costs involved and whether (in our professional experience) you are likely to see results. That way, you can make an informed decision about how to proceed.

We can talk you through a wide range of options from informal negotiations to litigation. Our expertise includes:

Informal settlement discussions – we can liaise with the debtor on your behalf to see if we can find a solution to the issue. This is usually a good option if you want to preserve the business relationship.

Pre-action negotiations – this involves sending a letter before action (also called a letter of claim or pre-action protocol letter) to the debtor to formally request repayment of the debt.

This is the required precursor to starting legal proceedings. However, with our negotiation skills, we are often able to persuade the debtor to agree to a settlement bringing the matter to a close at this stage.

County court money judgment proceedings – we can provide advice on applying to court for a County Court Judgment (CCJ). Depending on the response from the debtor, this process can be fairly straightforward – if they admit liability for the debt or do not respond to your claim, you can simply apply for ‘judgment by admission or judgment in default’ respectively to receive a CCJ in your favour.

If the debtor objects to your claim, wholly or in part, the claim can become more complex. At this stage, we can provide further advice about strategy and whether proceeding with the claim is commercially viable.

Charging Order proceedings – if you obtain a CCJ, we can provide advice about securing it over the debtor’s assets by way of a Charging Order. This means, if the debtor later sells the asset or they become insolvent, you will be prioritised and have a strong chance of recovering some or all of the debt.

Enforcement proceedings – you can also enforce a CCJ by instructing county court bailiffs or High Court Enforcement Officers to go to the debtor’s premises and recover the debt.

Insolvency proceedings – where the debtor cannot pay because they are insolvent, we can provide advice on making them bankrupt (if they are an individual) or winding up their business (if they are a company).

If you are an unsecured creditor, it means that you cannot rely on any of the debtor’s assets as ‘collateral’ for the debt, such as a property or shares in a company. If the debtor becomes insolvent, you may be unable to recover your money and you will be a lower priority than the secured creditors.

The vast majority of debts are unsecured. However, if you obtain a CCJ, we may be able to secure the debt over the debtor’s assets by way of a Charging Order. This can strengthen your position considerably.

If you are a secured creditor, it means that you have a charge over some of the debtors assets, e.g. their home, their car or shares in their business. Secured creditors are often called ‘priority creditors’ because when the secured asset is sold, you will recover your money before any unsecured creditors. This is the same if the debtor becomes insolvent.

There is also a priority among secured creditors. E.g. if you have a Charging Order over a property that is a second charge behind a mortgage, the mortgage lender will recover their money first.

For unsecured debts, you have 6 years from the date of the debt or from the date the debtor last acknowledged the debt to start a legal claim.

For secured debts, you have 12 years from the date of the debt or last acknowledgement of the debt.

Once time has run out, you may be unable to recover the debt unless you can get permission from the court to pursue it. If you are concerned about running out of time but are unsure about whether to pursue the debt, we can provide advice about the steps you can take, including liaising with the debtor on your behalf to persuade them to acknowledge the debt.

You can charge the rate of interest that is written into your original payment terms with the debtor.

If the debt is with a business, you may also be able to seek ‘statutory interest’ at a rate of 8% + the Bank of England base rate (but not if a different rate of interest is written into the contract).

If someone has signed a personal guarantee for a business debt, you can pursue them directly for repayment if the business defaults on repayments.

We can provide further advice on the terms of personal guarantees, whether it is enforceable in the circumstances and whether it may be appropriate to pursue the guarantor.

There are several stages to getting a Charging Order:

- You must obtain a County Court Money Judgment

- You must submit an application for a Charging Order. If accepted, the court will issue an Interim Charging Order

- You should immediately register the Interim Charging Order at the Land Registry. It will not be effective until registered

- The court will list a hearing for the Final Charging Order. At the hearing, they will hear evidence and decide whether to make the Order

- Once the Final Charging Order is made, you can apply to register it at the Land Registry and remove the Interim Charging Order

We can handle every stage of this process on your behalf, ensuring that all applications are submitted in a timely manner to prevent the debtor from selling or transferring the assets before your debt can be secured.