Debt Recovery

Many businesses fail as a result of bad cash flow. No matter how busy your business, if customers do not pay your bills severe financial difficulties will ensue. Our debt recovery department based in Guildford town centre has over 20 years’ experience recovering overdue commercial debts.

Before attending a meeting with a solicitor please bring the following information:-

1. List of debtors and how much they owe you
2. Any proof or evidence showing that the debt is undisputed. E.g Signed contract, terms and conditions, letters accepting offers made.

Our Debt Recovery Procedure

Initial Steps

A letter before claim and or Statutory Demand will be served. This will give your customer a final opportunity to pay before proceedings are issued. If your claim is against a company, your solicitor may advise to proceed to issue a Winding up Petition.

Making a Claim

Depending on the level or amount of your claim, action may be commenced either in the County or High Court. Our office, being based within a 5 minute walk from Guildford County Court enables the speedy issue of proceedings. Our solicitors will discuss the court procedure with you so as to ensure that the debtor has the wherewithal to satisfy any Judgment which you may obtain. Sometimes the employment of enquiry agents will assist.

There is a possibility of making an application for what is called Summary Judgment. This can be undertaken so as to short circuit the entire court process where the debt is undisputed or upon the service of a defence it is clear that there is no reasonable prospect of the debtor disputing the claim. Our solicitors can explain this process which will have the effect of not only shortening the entire process, but reducing the overall legal costs which may be incurred.

Similarly, if the Defendant fails to reply to the Claim we may enter Default Judgment, which again will reduce your legal fees as no representation at Court will be necessary and a Judgment will be obtained shortly.

Enforcement of Judgment

Upon obtaining a Judgment you then need to recover the sums which are due and this will involve enforcement proceedings. Often the County Court Bailiff can be instructed to recover goods from the debtor, in some circumstances it may be appropriate to commence Bankruptcy or Winding up Proceedings. There is also the opportunity of being able to instruct the High Court Sheriff even though the matter was litigated or heard in the County Court. The High Court Sheriffs are more powerful that the County Court Bailiffs.

Other services you may be interested in:-

Litigation

Commercial

Statutory Demands

Individuals

A service of a Statutory Demand in accordance with the provisions of the Insolvency Act is a powerful tool. No formal application to the Court is required, but simply the service of a document outlining the debt which is due. It is fundamental however that there should be no dispute as to the debt. It is essential that service of the demand is proven to the Court. After service on an individual of a Statutory Demand the debtor will have 18 days to make an application to the Court to set it aside. If they fail to do this after 21 days, it will be possible to commence bankruptcy proceedings.

Limited Companies

Alternatively a Statutory Demand could be served on a limited company. In this case the company has 21 days to make an application to the Court for an Injunction to stop the issue of Winding up Proceedings. It is not necessary to serve a Statutory Demand on a limited company and one could simply issue Winding up Proceedings, but it is fundamental that there must not be any dispute as to the debt.

“Statutory Demand” Key Points

Formal last chance demand for payment
Correct service of the demand is crucial
Debtor has 21 days to pay the debt or come to some arrangement
Debtor may take action to set aside the Demand in order to avoid the Creditor proceeding with Bankruptcy or Winding up Proceedings.
Debt must be more than £750 and must not be more than 6 years old.
Once the 21 day limit expires, Creditor may commence insolvency proceedings against the Debtor.

“Summary Judgment” Key Points

Can be used if proceedings are commenced and the debt is then undisputed or there is no real prospect of the debtor defending the claim.
Judgment can be made without a hearing
Legal Costs may be recoverable.

Claim Interest on Late Payments of Commercial Debts

The Late Payment of Commercial Debts (Interest) Act 1998 and Late Payment of Commercial Debts Regulations 2002 gives businesses the statutory right to claim interest on late payments from other businesses at the rate of 8% above the Bank of England’s Base Rate. You may also claim compensation of up to £100. For more information click on this useful link:

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1080465982

Ensure your sales contracts allow you to recover your goods when payment has not been made in full!

Known as “Romalpa Clauses” or “Retention of Title Clauses” these are provisions in a contract that allows the seller to retain the legal ownership of the goods until payment is made in full. The benefit of this it allows the seller to repossess the goods if the buyer becomes insolvent. Ensure these clauses are included within your sales contracts to avoid any other creditor having a claim over goods that you have sold to an insolvent buyer!