Debt Collection — An Overview

Recovering a debt from someone who owes you money can be frustrating and challenging. Whether you are a business chasing an unpaid invoice or an individual trying to recover a personal debt, understanding the options available to you is the first step towards getting what you are owed.

Before taking legal action

Before issuing court proceedings, it is important to follow the pre-action protocol. This means writing to the debtor setting out the amount owed, how it arose, and giving them a reasonable period to respond. A well-drafted letter before action, particularly one sent by a solicitor, can often prompt payment without the need for court proceedings.

Issuing a claim

If the debtor fails to pay or respond to your letter before action, you may issue a claim through the county court. For debts under £100,000, this can be done online through Money Claims Online. The debtor will have 14 days to respond, and if they fail to do so, you can apply for judgment in default.

Enforcement

Obtaining a court judgment does not guarantee payment. If the debtor still does not pay, you may need to take enforcement action. Options include instructing county court bailiffs, applying for a charging order over the debtor's property, or obtaining an attachment of earnings order.

Insolvency proceedings

Where a debtor owes more than £5,000, you may consider serving a statutory demand, which can be a precursor to insolvency proceedings. This is often an effective way of concentrating the debtor's mind, as failure to pay or set aside the statutory demand within 21 days can lead to a winding-up petition (for companies) or a bankruptcy petition (for individuals).

If you would like advice on recovering a debt, please contact our litigation team.

This is not legal advice; it is intended to provide information of general interest about current legal issues.