Debt recovery can be difficult, especially if the debtor you are trying to recover money from someone who isn’t responding to you.
However, there are some steps you can take to make sure that any debt is paid, including serving letters, undertaking mediation and, if all else fails, taking legal action.
In this article, Debt Recovery Expert Jason Grimster details the debt recovery process, answering any questions you might have.
How does debt recovery work in the UK?
There are a couple of things you can do to try to recover the debt without resorting to legal action, including:
- Reaching out to the debtor directly,
- Negotiating with them, to try to come to an agreement,
- Instructing a debt collection agency to recover the funds on your behalf,
- Mediate with the debtor to try to reach a resolution,
- Threaten legal action, to encourage them to repay the debt.
In some cases though, legal action is a necessary step, so make sure to keep a record of all of the above steps you have taken so that you are prepared if things do go to court.
Related: What can I do if someone defaults on my personal loan?
How long does a company have to recover a debt?
In the UK, there’s a limitation period which dictates how long you have to take legal action to recover an unpaid debt.
How long you have depends on the type of debt but, generally for most simple debts, you have six years to legally enforce it from the date the debt became due.
This period may be extended in certain circumstances, such as if the debtor recognises the debt or begins to pay it back. And, in some cases, there may be no limitation period if, for example, the debt is related to a mortgage, judgement or certain types of government debt.
After this limitation period expires, you will lose the right to take legal action to enforce the debt. However, because the debtor technically still owes you, you can still ask for it to be repaid – just not through legal action.
To find out exactly how long you have to recover your debt, we’ll need to know the circumstances of your case. Please get in touch with our bright debt recovery team on 01202 499255 or by filling out the top of this page.
Related: A guide to personal guarantees & the risks
What is the debt recovery process UK?
The first step to recover a debt is to contact the person/company who owes money.
If the debtor doesn’t respond to your initial contact, you can send a Letter of Claim that warns them of your intention to take legal action if the debt isn’t repaid within a certain time period.
After this period, if they have yet to settle the debt, legal action can begin. This would involve launching a claim through either the County Court or High Court, depending on how much the debtor owes you.
During court proceedings, the debtor is allowed to respond to the claim. At this point, they may dispute it and provide reasons as to why the claim is invalid. Once the debtor’s argument has been heard, or if they fail to respond, the court will make a judgement.
As part of this judgement, the court will provide instructions as to how and when the debts should be repaid to you.
Related: Can I claim against an estate if the deceased owes me money?
What to do if someone doesn't pay court order?
Following the judgement, if the debtor doesn’t pay up, you have some enforcement options.
- You can issue a Warrant of Execution, which permits your bailiff to seize the debtor’s assets on your behalf and sell them to recover the funds.
- An Attachment of Earnings can be sought. This involves the debtor’s employer taking money from the debtor’s wages to pay the debt.
- You can get a Charging Order where the debt will be secured against the debtor’s property, which will be subsequently sold.
What does a debt recovery solicitor do?
A debt recovery solicitor will provide you with guidance as to what is the best route to take to recover your debt, and assist you in drafting letters to the debtor, negotiations, filing claims and more.
Debt recovery proceedings can be a minefield, so it’s always best to have a solicitor on side right from the start to ensure that the correct legal action is taken and that you have the best chance of recovering any debt.
Plus, if legal proceedings do arise, it’s beneficial to have a solicitor already instructed, as they will understand the complexities of your situation without having to be brought up to speed before representing you in court.
How to write a debt collection letter to a company
A solicitor will assist you in drafting this, but usually a debt collection letter will include:
- Reference details – Your information and address, the debtor’s information, a reference number for tracking purposes
- A statement as to how much is owed – including an invoice number and due date
- Payment instructions – Deadline and how the debt is to be paid
- Consequences for not paying – Legal action etc.
Your solicitor will also make sure that the letter is written professionally and courteously and that it is legally compliant.
What happens if a company cannot pay its debts?
If, after all legal proceedings have occurred and a Warrant of Execution/Attachment of Earnings/Charging Order has been served, and the debtor is still unable to repay you, as it is too large a sum, you can apply for their bankruptcy/the company’s insolvency.
Insolvency proceedings will involve any debtors of the company being repaid, with those with the highest unpaid debt being prioritised.
Specialist Debt Recovery Solicitors
If you have any questions following this article, or would like to discuss your options with an expert, please don’t hesitate to get in touch with our bright Debt Recovery team.
We can provide tailored advice and assist you in contacting the debtor, drafting a letter and going to court.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial appointment.
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