FAQs about Debt Recovery
DEBT RECOVERY FAQS – BOURNEMOUTH SOLICITORS
When is a debt worth pursuing?
There is no set answer to this and in any case a cost-benefit approach should be used. If the debt is for an amount less than £100, given the time, money and effort potentially involved, it may not be worth pursuing a claim. It may also be worth considering the effect of not pursuing the claim. Will not pursuing the claim make it apparent to other small debtors that you will not do anything if they do not pay?
You should also consider the circumstances of the debtor. If the debtor is bankrupt, you have little chance of recovering the debt unless you have sold the debtor goods and properly drafted retention of title clauses into the contract of sale (retention of title clauses allow the seller to retain ownership of goods they sell until the purchase price has been paid). Perhaps the seller is experiencing financial difficulties and payment terms could be renegotiated. Or maybe the seller is arguing that the goods are defective. There are countless scenarios.
How does the county court deal with claims?
If the claim is not resolved or settled, then the creditor will be entitled to make an application to the county court.
There are three ‘tracks’ in the county court:
- Small claims – for debts up £5,000
- Fast-track – for debts ranging from £5,000 to £25,000
- Multi-track – for debts larger than £25,000
Although the amount can be used as a guide as to what track the case will be heard in, the complexity of the case may also be a factor.
What are the waiting times for each track?
There are no set waiting times, as these will typically vary with the current case-loads of the courts. However, as a very rough guide, you can expect to wait around a couple of months for a small claims hearing, 30 weeks for a fast-track claim and up to (but not necessarily) two years for a multi-track claim!
What is a statutory demand?
Statutory demands are documents used to request payment of a debt. They can be used for debts that have been in existence for less than six years and for personal debtors and customers alike. The demand gives the debtor 21 days to pay the debt or come to agreement regarding repayment, or 18 days to have the demand set aside in court. Debts cannot be set aside for any reason, however, and the court will only do so where there is a genuine dispute.
Typically statutory demands will state:
- The amount to be paid
- When the payment needs to be made
- The consequences of not responding to the request for payment
- The contact details of the creditor
- The right of the debtor to challenge the demand through legal means
Are statutory demands are useful?
Whilst statutory demands certainly are useful, there are several things to consider before using one:
- Statutory demands that are ignored should be followed up with a bankruptcy order. Bankruptcy orders can only be issued where the debtor is unable to pay a debt of £750 or more.
- Failure to follow up a claim through other legal means might make recovering the debt more difficult as the debtor starts to believe the creditor is not prepared to fully pursue his claim.
- There is a fine line between requests for payment and threats.