The methods used to recover debts depend partly on the amount you are trying to recover. A “letter before action” specifying the debt, and giving a time limit for payment should always be tried before starting Court action. Often this is enough and the debtor reluctantly pays up. The letter should say that, if the debt is not paid within the time limit, action in the Court will be taken to recover it.
Up to £5,000
Currently amounts up to £5,000 are recovered under the “Small Claims” procedure. Please note that costs cannot be recovered in the Small Claims Court and only the actual Court fee paid, and certain specified sums, can be recovered in addition to the debt. As solicitors’ fees cannot usually be recovered, it is advisable to recover debts through the Small Claims Court yourself.
Amounts over £5,000 are recovered through the County Court, and there is normally an entitlement to recover costs in addition to the debt itself.
If your claim is successful, you are entitled to claim interest on the outstanding debt. This is in addition to any right to claim interest under the contract. Solicitors’ fees and, if necessary, those of barristers can be recovered provided that they are held to be reasonable by the Court. Court fees can also be recovered.
Remember, judgment in your favour is still only a piece of paper. It may be necessary to take further proceedings to enforce the judgment. The costs of these further proceedings can also be added to the judgment debt. Against a company, a Statutory Demand often works – no company wants to risk a winding-up order.
Our experienced team can advise you before and during any Court action. Please telephone 01223 202 345 or e-mail Will Cowell.