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Law for Business

Knowhow - guidance - precedents

Excello Law , 14 MAY 2015

How to recover debts owed to you

How to recover debts owed to you

Mark Gardner

Excello Law


There are a number of ways you can recover the monies owed to you by another individual or company.

Making informal contact with the debtor

Speaking to the debtor and agreeing to a repayment plan should be the first port of call. If this does not work then write a letter to the debtor outlining the holder, amount and purpose of the debt, any previous steps made to recover the amount as well as the steps that will be taken going forward. Also note the date by which the payment of the debt is due and request that any disputed issues are put in writing. A copy of the invoice or statement of account should also go with any letter. Do remember your rights to recover interest and collection charges as set out in your terms of business or under the late payment legislation. With any steps you take yourself, it is important that you keep notes of any discussions, promises and excuses for payment including the date and time, and confirm what is said or agreed in writing or by email.

Mediation Services

A mediator is an impartial person trained to handle difficult discussions between you and the debtor. This is a less stressful process than attending court and should be considered before taking the matter further. There are charges associated with using a mediator which need to be considered before going ahead.

Court Proceedings

You can issue proceedings to the court to recover debts but do make sure that you have checked that everything is in order and that you have investigated and responded to any reasonable areas of query before doing so - sometimes there can be something in them! However, it is worth noting that as of March 2015, court fees have risen on all claims over £10,000 making England and Wales one of the most expensive jurisdictions in the world. See 'Court Fees Set to Rise From Next Monday' for more information.

Statutory Demand

A statutory demand is a formal written request from a solicitor that a debt must be paid. This is only suitable for debts which are clearly not disputed and which are for a clearly defined sum - again remember to consider late payment interest/compensation/costs under the legislation or terms of business. Upon receiving a statutory demand, the debtor has 21 days to settle the debt, secure the debt or reach an agreement for payment.

Bankruptcy and Insolvency

In the case of a debtor ignoring the statutory demand or being unable to repay the debt a creditor can apply to the court to declare the debtor bankrupt/place into liquidation provided you are owed £750 or more by an individual. This limit is due to rise by October 2015 to £5,000. See 'Bankruptcy Levels Expected to Increase from October 2015' for more information.
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