Business Debt Management Debt Recovery

· Debt Recovery Introduction
· Factors Involved
· Approach
· Getting Started
· Procedure
· Enforcement
· Charges
· Table Of Fees

Introduction

Debt or asset recovery is our core business. We are able to handle all your requirements, home and overseas, from a single letter-before-action to large numbers of routine court actions. We also handle defended actions in-house. Because we are technologically advanced, our methods can be flexible. We tailor our approach to the requirements of the individual client on a case-by-case basis. We work with business clients or individual credit controllers to help them improve their own techniques so that, in the long run, they may no longer need our services.

High or low volume instructions are handled efficiently and intelligently. Reports are prepared as often as you like. All manner of business types are catered for. Back to menu.

Factors Involved

Obviously the approach should differ depending on whether the non-payer has cash-flow difficulties or whether they feel they have a legitimate grievance. The size of the claim will also indicate how it should be prioritised and how much in terms of resources should be dedicated to its recovery. Back to menu.

Approach

Our approach is simply to concentrate on what gets the best results. This varies from case to case and from business to business. It may involve negotiating with debtors to start a delinquent account moving again, or tough unyielding legal action or even insolvency proceedings. Mediation or arbitration are also catered for.

Because we are focused on the result - recovering your money - we quickly consider each case on its merits, guiding you to the appropriate tools for the job. We consider with you whether you have complied with the spirit of the 'pre-action protocol', whether there are any legitimate reasons for delaying payment, what the prospects for recovery are. We then advise on the appropriate course of action and act on your instructions taking into consideration whether the case is worth pursuing. Back to menu.

Getting Started

Instructions are sent by fax or email, preferably using the instruction form which is available from this website. Particular attention should be given to the correct identification of the debtor, the reasons for non-payment and the prospects for recovery. Back to menu.

Procedure

A routine undefended court action against a UK debtor may look like this (figures show days elapsed):

· Letter Before Action
· Statutory Demand
· Commence Court Claim
· Default Judgment

· Letter Before Action: Demanding payment direct to the client (for speed) within 7 days, or sooner if urgent, failing which action will be taken without further notice and warning of the effect of court action on their credit-rating. Back to menu.

· Statutory Demand

Some cases will be best started by statutory demand. This is the first step in insolvency proceedings. Because of the higher cost of this step, it is usually best to reserve it for urgent or important matters. See also bankruptcy and insolvency. Back to menu.

· Commence Court Claim [8-10]: If there is no response to the letter before action, or if negotiations come to nothing, it may be appropriate to commence court action. The official claim form is sent with a court fee to the court for 'issue'. The court then sends it by post ("served") to the debtor. They have an opportunity to acknowledge service and state their intention to defend. The creditor is entitled to a default judgment if the debtor either fails to state their intention to defend within 14 days, or if, having done so, they then fail to serve a defence within 28 days of being served. Back to menu.

· Default Judgment [28]: Assuming no defence is received, a court order ('judgment') is obtained entitling the holder immediately to seek to enforce the judgment. Often referred to as a "CCJ" this is obtained at the earliest opportunity and we move then to enforcement. Back to menu.

· Enforcement: There is a range of options available. The choice depends on where the debtor's assets are located, and in what form. Back to menu.

Options include:

· Oral Examination
· Warrant
· Charging Order
· Attachment Of Earnings
· Third Party Orders
· Bankruptcy/Liquidation

·Oral Examination: An application to the court for the debtor, or its directors (if a company), to be examined on oath as to the financial status of the debtor. This helps decide on the best enforcement method. Back to menu.

·Warrant: Enforcement by sheriff or bailiff against moveable assets such as furniture, equipment, stock or other valuables. Back to menu.

·Charging Order: Against the equity in a house or business premises, or shares. Back to menu.

·Attachment Of Earnings: An order of the court allowing paye earnings to be intercepted for the benefit of the judgment creditor. Back to menu.

·Third Party Orders: An order of the court that debts owing to the debtor be diverted for the benefit of the judgment creditor. This might include bank balances. Back to menu.

·Bankruptcy/Liquidation: A court order appointing a trustee in bankruptcy, or a receiver to administer the estate of the debtor for the benefit of all creditors.

Enforcement is currently under review by the Lord Chancellor's Department with a view to making it more effective. Giving access to data held on individuals by government departments by the court is under consideration. Back to menu.

Charges

Solicitors' charges are generally known as 'costs'. This is to be distinguished from 'disbursements' which consist of the expenses the solicitor has to bear on your behalf - for example court fees or tracing costs. The position regarding costs and disbursements in debt recovery matters can be found below. For more information regarding Funding, please follow this link.

· Undisputed Matters
· Defended Matters
· No Win, No Fee?
· Overseas
· Costs Table

The cost of a matter or the method of charging is always agreed in advance. We aim to achieve complete transparency in terms of fees - as such you should never be surprised by the size of a bill. The following principles usually apply to debt recovery.

Undisputed Matters

There is nothing more galling than having to pay from your own pocket towards the cost of a successful recovery action. We believe the debtor should pay. Therefore in undisputed matters, where court action is taken, we operate a system of fixed fees (see Table 1 below) which are pegged to the sum which, according to scales published by the Lord Chancellor, is recoverable from the debtor. The cost of the initial letter to your customer and time spent on non-routine activities may not be recoverable and we may make a charge for this, but we try to keep it to a minimum. Interest on the principal sum is also payable by the debtor, which can help to offset the cost of any time element. Back to menu.

Defended Matters

Our fees are calculated on a higher hourly rate, which is agreed with you in advance. Please note that once a matter is disputed you may become liable for the costs of the opponent if you lose the case or if you discontinue the action for any reason. For further details see the funding section of this site. These matters are discussed in detail before we take the matter further. Back to menu.

No Win, No Fee?

"I have ethical objections to such a charging basis, as it tends to obscure the absolute commitment owed by the solicitor to their client to act in the client's best interests and introduces an element of vested interest which can cause loss of trust and lead to the breakdown of the professional relationship."

In cases which are resolved before the issue of court proceedings commission charges are usually too expensive because of the high recovery rate that solicitors can achieve. We therefore encourage the use of the discounted hourly rate system (above).

Solicitors are not allowed by law to operate a commission-only based fee structure in cases which go to court. Conditional fees are available, but these are not without cost because insurance is payable, as are disbursements such as court and barrister's fees, and they are generally only offered in personal injury cases, where the outcome is sufficiently predictable to justify the professional taking a risk. Back to menu.

Overseas Matters

Collections in Europe have their own fee structure, to be quoted on request. Collections in other countries are undertaken by agents on a commission basis, typically 25%. A handling fee is applied for supervising their work. Back to menu.

Table 1

Charges - Court Proceedings (UK)

  1 2 3
Claim Court fee
(issue)		 Costs Costs Court fee
(bailiff)		 Costs
0-200 30 50 22 50 2.25
200 30 50 22 50 2.25
300 50 50 22 50 2.25
400 50 50 22 50 2.25
500 80 70 22 50 2.25
1000 120 80 22 50 2.25
5000 250 100 30 50 2.25
15000 400 100 30 50 2.25
50000 600+ 100 30 50 2.25

The cost of conducting an undisputed matter depends how far it is taken. The three stages envisaged by this table are - issuing proceedings (1), obtaining judgment (2) and enforcement (3).

The court fees and the costs (our fees) of the three stages should be added together to give a maximum sum exposed. These costs and disbursements are all recoverable in a successful action. However, you will be primarily responsible for these charges. Interest can help to offset irrecoverable time costs.

All costs and disbursements (court fees) shown are recoverable in full from the debtor.

Allow £10 for a letter before action, plus figures in the table, plus Vat. Enforcement by the sheriff (recommended) is cheaper than shown, but allow £60 abortive fee in an unsuccessful action. Back to menu.

Table 2

Other Services

1. Lengthy file
(over 20 pages)		 Reading cost £40 per 100 pages
2. Company search Cost plus time. Please ask for quote
3. Registered office
search		 £4.50
4. Tracing or credit
assessment 		Minimum £85 - requires individual quote
5. Searches Land registry and CCJ searches - requires individual
quote

Why not call for a quote on 01273 405900 or e-mail details to: jastbury@astburys-law.co.uk