Issuing Court Proceedings & Enforcement
Once any pre-legal debt collection activity has run its course and payment has not been received then it may be necessary to issue legal action through the courts to recover the amount owed.
You need to be aware that issuing legal action can be time-consuming and expensive and there is no guarantee of success.
Know Who You Are Dealing With
The key question when issuing court proceedings is specifying the legal entity that you are issuing the claim against. This is why it is so important to confirm this information when you initially contract with someone as trying to establish or prove this after the event can lead to problems.
A defendant can look to defend the matter by denying they are liable and unless you can prove to the court with documentary evidence such as a signed contract or credit application form then you may lose the case.
Credit Check The Defendant
We recommend this is done before any time or monies are spent on issuing court proceedings.
There is no point incurring cost and time issuing court proceedings against a company or individual in order to obtain a court judgment to then discover they are insolvent or don’t have the means to pay.
Issuing The Claim
In terms of issuing court proceedings, the government have an online service that allows you to issue legal action yourself at: www.moneyclaim.gov.uk
The benefit of using the online service is that it keeps costs to a minimum and you only need to pay the court issue fee that then forms part of the debt. The downside is that it is a ‘do-it-yourself service’ so you would usually need a little understanding of the court system in order to navigate the process correctly.
As such you might want to get a solicitor or third party such as a debt collection agency to assist with the issuing of the court proceedings. They would usually charge for such assistance although there are circumstances where some of the solicitors costs for issuing the action can be added to the claim value.
We would recommend getting an agreement as to what the costings are from any third party for dealing with legal action on your behalf before proceeding with the claim.
Defended Matters – Claims below £10,000 (Small-claims track)
If a defence is offered by the defendant when the claim is received, then this can often lead to a delay in matters whereby a hearing is necessary and both parties present their evidence in front of a district judge to support their claim.
As such it is usually better to get a settlement before legal action is issued or using the mediation service after the matter is issued if there is a genuine dispute on the matter.
Generally, on a small claims action, each party bears their own costs for the cost of the action so if you have used a solicitor to assist with the claim after it has been defended then their costs may not be recoverable.
Defended Matters – Claims above £10,000 (Fast track) and above £25,000 (Multi-track)
If your claim against the debtor is for more than £10,000 and the matter is defended (or if there is a counterclaim against you for more than £10,000) then it will not be dealt with as a small claims action but instead allocated as a Fast track or Multi-track action. Neither of the procedures for these tracks is straightforward and both may lead to a formal court case.
There will also be significant cost implications on Fast and Multi-track actions as you will need to use a solicitor to act on your behalf which will be chargeable at an hourly rate.
The other main difference to the Small-claims track is that if you lose your case, you may have to pay the costs of the other side.
Enforcement Of A County Court Judgment (CCJ)
Judgment in your favour does not necessarily result in a payment being made and it may be necessary to enforce the judgment by one of several means. The most common method of enforcement would be a County Court Bailiff (CCB) for amounts under £600 and a High Court Enforcement Officer (HCEO) for amounts over £600.
As a general rule, we would always advise using an HCEO to recover a CCJ as they are incentivised to recover the debt on success whereas a County Court Bailiff is only paid an hourly rate so they are less effective.
On attendance, the HCEO will hopefully be able to seize assets belonging to the defendant if they are still resident at the address provided. However, if the property is a residential address the HCEO will not be able to force entry to the property and can only obtain entry by peaceful means.
Recent changes in enforcement legislation mean that the HCEO has to send a notice of enforcement to warn of their intended visit and this often means that defendants at residential premises will simply refuse to answer the door as a means of avoiding payment.
Other Enforcement Options
There are a number of other enforcement options available depending on the legal entity of the debtor and the amount of the CCJ.
Charging Order – A Charging Order secures the CCJ against any property owned by the defendant. In the event that the property is sold then the CCJ should be paid out of any equity in the property.
Bankruptcy – This is a court order against an individual for their assets to be taken and sold to pay the debt.
Winding Up Petition – This is a court order against a limited company for the company to be liquidated and their assets to be sold to pay the debt.
Third Party Debt Order – This is an order of the court that freezes money held by a person, organisation or institution (such as a bank or building society) on behalf of a Defendant.
Attachment Of Earnings Order – If the Defendant is known to be employed and you have details of the Defendant’s employer, it may be possible for you to apply to the court to obtain a deduction from the Defendant’s salary or wage, directly from the Defendant’s employer.
You should always avoid Court action whenever possible and good credit control and debt collection procedures should support this aim – if you do need to take things further, seek expert advice from professionals who can guide you.
Blunt advice on debt collecting from Yorkshire Powerhouse
Have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
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Here are some questions you should put to a potential Debt Collection Agency to help you make a decision as to who to appoint to help improve recovery rates