Finance Focus
Frances Coulson Head of Insolvency & Litigation
Moon Beever Email:
fcoulson@moonbeever.com
DEBT RECOVERY England & Wales
In the last 20 years, very few firms of solicitors traditionally specialised in debt recovery in England, because the space provided low profit margins and successful clients ordinarily failed to obtain payment of their legal costs from the debtor, thus access to justice via a solicitor was not cost effective. However there has been a move back from Debt Collection Agencies, ( ‘DCA’s’), partially because a Solicitor can deal at least as well with pre legal recovery and move seamlessly into legal collections through the courts (litigation being reserved to qualified solicitors unless you are a litigant in person); partially because there is increasing focus on compliance and regulatory issues especially for banking Claimants; and partially because, in reality, Solicitors can be much more effective, employing a full range of tools for recovery. Use of a Solicitor also means the fixed costs are recoverable from the debtor which at least contributes to your collections bill if it doesn’t pay all of it, and can be more economic than a pure percentage.
systems, integrated with the courts’ (less sophisticated) systems, and made for detailed reporting on results as well as providing transparency to clients online on their files.
A
So what are the tools at the Solicitor’s disposal? Obviously on a pre-legal basis, lettering suites and telephony collections (agreed with the client and compliant with regulation and protocols) can be effective. Diallers can be employed to maximise call results. Payments should be capable of being taken online and on the ‘phone, as well as by the older fashioned methods. We have even begun to employ visual media to encourage debtors to pay, as much collection is as much about engagement as threats of legal process.
The County Courts are used to recover smaller debts but even larger debts capable of being pursued in the High court will probably get pushed down to County Court level if defended
lso, specialist law firms have the capacity to deal with collections from single complex instructions to bulk collections of many thousands with sophisticated
certainly if under £100,000. The County Courts are stretched and thus inefficient and their enforcement is hit & miss. Bulk issue in the dedicated court bulk issue centre gives lower court fees and certain efficiencies however. Individual claims can also be issued more cheaply using “MoneyClaimOnline” direct to the Salford Online issuing centre. An unincorporated defendant will be entitled to transfer to his local county court to hear any dispute. However, if judgment is granted and the debt is over £600 it is worth transferring to the High Court, as permitted, for enforcement by the High Court Enforcement Officer (the old Sheriff) who is paid by results.
Another alternative is to pursue for bankruptcy or winding up. These are not strictly debt collection processes, but a claimant is entitled to pursue them if unpaid a sum of over £750, and no bona fide dispute exists. They are expensive procedures for the claimant ,with disbursements before any fee is paid to the lawyers, of £1000-1500 per case. However they are effective weapons and the English Insolvency law is very effective at providing recovery routes against a
fraudulent, or evasive debtor. A statutory demand (issued cheaply by the solicitor herself) and served personally on the debtor gives him 21 day to pay or 18 days to apply to set aside the demand. After expiry without application you may present a petition. (If the debtor is a company it must seek to injunct you from petitioning-an expensive process in itself).
Your solicitor should encourage mediation in disputed cases which can be incredibly effective (& is a whole separate topic).
Underlying all of this I should say is the critical need to know your debtor. So, as the client, manage your credit risk, and if the debt becomes overdue, instruct your lawyer quickly for best chances of recovery. Do your credit checks and when your lawyers have to be involved make sure they have the right tools to find and target the assets, and so advise on the best tactics for recovery. Debt collection is often treated as a non legal subject, low end of the legal market,but all commercial litigation is debt collection when it comes down to it, and the same skills employed in larger cases may be needed in smaller ones. Make sure your solicitor has them.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126