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If you are a business that is owed money and have exhausted all other avenues of debt recovery suing comes as a last resort. This indicates that you must consider thoroughly if the situation is right for you.
Taking someone to court can be an effective method of debt recovery, as the procedures are designed to be quick and easy to operate.
Before going to court, you must consider whether you are likely to win your claim.
Claims made to the County Court by businesses concerning money owed are rarely disputed, indicating that the court will usually grant a ‘Judgement’ as an order of payment.
Although this is the common outcome, if you think your customer may dispute your claim or if you are unsure of the claim’s success, it is best to consult a solicitor.
Alternative Dispute Resolution (ADR) schemes are not meant to replace the courts but should be considered before you take legal action.
Before taking your claim to court, you must assess how likely it is for you to receive your money.
If there are already court judgements against your customer, it may be less likely that your debt will be paid.
To clarify that the customer you wish to make a claim against has no other Unsatisfied (unpaid) Court Judgements you should:
Before taking anything to court, you must consider how much time you can afford to spend pursuing the debt.
If a claim is not disputed:
One of the most sensitive areas of debt recovery is determining if the money that you will spend to instigate a claim is going to be rewarded with financial success.
If you make a claim, you must consider that:
A claim dispute occurs when your customer resides or conducts business in another court’s area. The claim will be transferred to your customer’s local County Court hearing centre for the hearing.
At this point, you and the defendant will fill out a directions questionnaire and if:
The Small Claims Mediation Service will then attempt to arrange a mediation before the claim is transferred to your customer’s local hearing centre. If your claim is transferred, it is still possible that a Judge may refer your case to the Small Claims Mediation Service in which case you will be contacted by HM Courts & Tribunals Service to explain the next steps.
Even if your claim is transferred, you can apply for it to be transferred to another County Court hearing centre if you have good reasons. You may have to pay a fee for this, but you should not have to attend court for your request to be dealt with.
Under the Late Payment of Commercial Debt (Interest) Act 1998, you may be able to claim interest from when the date payment was due to the date of judgement. ‘Statutory Interest’ means that this can be attained even if your contract with your customer does not include interest. If you obtain judgement for £5,000 or more you may be entitled to interest on the judgement.
The Late Payment Act gives all businesses, irrespective of size, and public sector bodies, a statutory right to claim interest on late payment of commercial debts.
This means it can help businesses where:
All businesses and public sector bodies can use and amend the act for their specific claims for late payments.
This is a debt that results from a contract made between all businesses and public sector bodies, for a supply of goods or services. Businesses, irrespective of size, can claim late payment interests.
If you are a business seeking court proceedings on issues surrounding debt recovery, it is crucial that you obtain legal advice. The process can reap rewards if a judgement is granted but can prove costly if your claim is not successful. However, if alternative methods prove fruitless, Ackroyd Legal can provide you with expert guidance on matters of debt recovery.
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