Here, we answer the most common asked questions in relation to Debt Recovery:
What is a Winding Up Petition?
A winding up petition can have severe repercussions for a business and its directors – the most serious being the possible liquidation of the company. It is important to remember that the earlier you respond, the higher your chances of a successful outcome. If a creditor has made several attempts to recover debt from you, as a last resort they can petition the court to have your business liquidated. If the petition is passed and a winding up order is granted, the money raised from the liquidation will be used to repay the creditor. Read more.
How Do I Respond to a Winding Up Petition?
If the court notifies you of a winding up petition, you should act as quickly as possible and certainly within seven days. If the petition is advertised in The Gazette, your bank accounts may be frozen in response, causing real difficulty for repayment. Further, the advertisement could have a significant impact on your company’s reputation. Read more.
What is a Country Court Judgment?
A creditor can request a county court judgment when another person or company owes them money but has failed to pay it. The court will issue a county court judgment if it agrees with the creditor that the money is due. It can be especially distressing if you have already taken formal steps to collect money owed to you but the debtor has not cooperated. To see how you can request a County Court Judgment, click here.
How Do I Enforce a Country Court Judgment?
If the debtor still does not pay after a county court judgment, there are several options open to you. A county court bailiff can be employed to attend the debtor's premises and collect the money owed, or by seizing and selling goods. Alternatively, a further order can be applied for to enforce payment. Click here for more.
What is a Third Party Debt Order?
When your business is owed money, taking action to recover the debt can be stressful, time-consuming and harmful to your financial situation. There are several legal steps you can take to force payment. One such option is a third-party debt order. A third-party debt order can be applied for by a creditor when a county court judgment has been made but the debtor has not complied with its terms. Read more.
How Do I Obtain a Third Party Debt Order?
You must apply to the court for an order (the fee for doing so is added to the debt). The application will be reviewed and, if satisfied with the information provided, the court will make an interim order. The court will not however grant the application of the bank account is held jointly with another entity. To find out more, click here.
What is a Charging Order?
A charging order is used to secure a money judgment over land, securities or other assets. When the court has ordered the debtor to make payment to the creditor to satisfy an outstanding debt, the creditor can apply to the court for a charging order to secure payment. Just because a charging order has been granted this does not mean that the debtor will have to sell their property. To find out more,click here.
How Do I Place a Charging Order on Properties/Securities?
The first step is to apply for an interim order. A court officer will consider the application unless specific attention from a judge is required. If approved, you can then register the interim order at the Land Registry and serve the order on anyone with interest in the property. This might include co-owners, a mortgage lender, as well as the debtor themselves. You will then need to apply for the interim order to be made final. Read more.
How Much Interest Can I Charge on Late Payments?
Charging interest on late payments is an important tool to both encourage prompt payment and reimburse businesses for the inconvenience caused when they have to wait longer than expected to receive their money. However, it is also vital to ensure your interest rates keep you on the right side of the law. Failure to do this may open you up to legal liability, which can have far more serious financial consequences. If you have further questions, click here.
How do you Recover Debt Through The Courts?
Firstly, the debt recovery County Court procedure requires you to draft a formal letter. This lets your debtor know that, if they do not pay the debt in a specified period, you will commence legal proceedings. You must include specific information in the letter, depending on whether your debtor is a business or an individual or sole trader. For more information on the process, click here.
What Happens If You Are Taken to Court for Debt?
Before a creditor can make a court claim, they must send you a formal letter requesting that you pay the outstanding amount. The letter must fulfil specific requirements, which are different if you are a business or a sole trader. The letter will set out the details of the debt and provide you with a set period in which to make payment, failing which court action will be initiated. If you do not respond to the letter or your creditor is unhappy with the response, they can make a court claim. Read more.
What is Liquidated Sum?
A liquidated sum is a compensation figure for a breach of contract. Many commercial contracts will include a liquidated damages clause to deal with potential breaches. If one of the parties breaches their obligations under the contract, they are obliged to pay the liquidated sum to the other by way of compensation. The liquidated sum must be agreed in advance and written into the contract. To find out more, click here.
What are my options for paying back debt?
Cash flow problems can make it problematic to pay debts on time. However, these issues can be addressed in several ways, such as increasing sales, asset sales or cutting costs. If these measures are not possible, or insufficient, you may wish to investigate a debt payment plan. This may involve paying off the debt in full, breaking it up into manageable payments or coming to a compromise with your creditors where they agree to write off some of the debt. To find out more about the process of paying back, click here.
Who are the County Court Bailiffs and High Court Enforcement Officers?
Both County Court Bailiffs and High Court Enforcement Officers are types of court-appointed enforcement agents. They collect unpaid debts on behalf creditors. Enforcement agents have limited legal powers, via warrants and writs of control respectively, to remove and sell goods to recover debts and fees owed by a debtor. Smaller claims are dealt with in the County Court and the High Court handles higher value claims. If you want to know about enforcement agents' powers, click here.
How Do You Defend a County Court Claim and County Court Judgment?
If a creditor has warned you that they intend to obtain a County Court Judgment (CCJ), you must respond promptly, as time limits apply. Failure to do so can result in a default judgment, whereby the Court will set a monthly repayment or an order to pay the full amount immediately. If you intend to dispute the claim, the Defence form should be completed and returned. This must be done within 14 days of the claim being served. Read more.