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What are your legal options if you or your business is owed money?

Neither individuals nor businesses can really afford to leave money due to them outstanding for any length of time.

As Solicitors we are often consulted too little too late. Matters have already become complex due to delay. Debts may have become irrecoverable because debtors have shifted money and property to avoid paying debts.  The position quite clearly is that if you are owed money it is important that you pursue the recovery of that money without delay if you want to maximise your chances of getting your money back.

There are a number of ways that debts can be pursued and a number of important considerations that will determine which of the options should be used.

  1. Simple persistence in the form of courteous reminder letters and telephone calls to the debtor. Sometimes it is not the case that the debtor does not want to pay; they may have forgotten that monies are due or the debt is at the end of a long list of other priorities. Therefore unless you persist the debt will simply remain outstanding for some time. Just be careful that the calls and letters do not verge on harassment!
  2. A “letter before action” which is essentially a letter making clear that if the debt is not paid then Court proceedings or other form of legal action will follow. The letter should make clear what will happen if the debt is not paid by a certain date and that if legal action follows then the amount payable will increase with legal costs and interest. Interest is often due anyway but some people will not pursue interest if the bill gets paid without legal action.
  3. Late last year (2017) a new Pre-Action Protocol for Debt Claims was brought into being. It is important, particularly if a creditor wishes to be protected on the matter of costs, to try and follow this Protocol. It requires you to set out in detail how much is due, why it is due, when it is due and where appropriate to provide supporting documentation. The purpose of the Protocol is to try and iron out matters of dispute with a view to the matter being sorted out without court action. If that does not work it may provide some protection on costs.
  4. Issuing proceedings in the County or High Court.
  5. Serving a Statutory Demand and if the monies remain unpaid then pursuing the matter by way of a Bankruptcy Petition or Winding-Up Petition depending upon whether the debt is owed by a person, a partnership or a company.
  6. If rent is owed for commercial premises then depending upon the terms of the lease the landlord might be in a position to forfeit the lease and distrain for outstanding rent.   In a tenancy of living accommodation the landlord might chose to recover rent due by issuing proceedings for  a possession order and for the rent.
  7. If proceedings are issued, Judgment obtained but the monies remain outstanding then you can choose one of a number of ways to try and enforce  that Judgment e.g. by putting a Charge on a property owned by the debtor and then seeking a sale of the property, instructing bailiffs to remove and sell the debtors goods, attaching the debtors earnings if the debtor is employed or “attacking” a debtor’s bank account.

Before adopting any one of these procedures you need to think about the implications.  Some of these procedures are considered to be aggressive. They may end a relationship for good. They may result in the loss of a client. If the debtor is a major client and you wish to continue to do business with them it might be worthwhile calling and explaining why the unpaid debt is causing difficulty.  Other considerations will of course relate to costs.

What is clear though is that if a debt is not pursued in good time then there is a risk that it will become irrecoverable. This will either be because the debtor itself will go out of business and therefore possibly out of existence if it is a company.  The debt will also eventually be time barred if it is left more than 6 years although there may be exceptions to this. Early consultation with a solicitor will be beneficial.  Persistence in chasing the debt will also pay off.

If you are owed money and require assistance to recover it then please contact Manjit Kaur-Heer at Willsons Solicitors on 024 76387821.

Manjit Kaur-Heer

Manjit Kaur-Heer of Willsons Solicitors

 


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