Effective
Debt Recovery
It was announced earlier in
the year that as of October
the level of debt that an
individual had to owe a
single creditor before that
creditor could petition for their
bankruptcy was due to rise
from the current level of £750
to £5,000.
Although bankruptcy is not and was
not designed to be a method of debt
recovery it has been used by many as an
effective tool to recover from those who
can pay but won’t pay. The question for
many small businesses and sole traders
is where they go now. Court fees have
risen, although if the debt owed is less
than £10,000 the fees were unaffected.
As of October if an individual owes you
more than £750 but less than £5,000 it
is likely that you will now have to go to
Court and obtain a Judgment.
When considering any Court action for
debt recovery it is vital to consider the
prospects of recovery, as well as the
strength of your case. A strong case
without a good prospect to make a
recovery is not one that ought to be
proceeded with. Assuming that you
have established that the debtor has the
ability to pay, what next after obtaining a
judgment? Unfortunately more and more
it is the case that enforcement action
will be required; there are a number
of options: attachment of earnings,
charging orders, third party debt orders
and enforcement by a bailiff or High
Court Enforcement Officer. Attachment
of Earnings Orders can work well if
the debtor is employed, however the
amount being paid each month is set
by the Court and it may not be as much
as you hope. Charging Orders are ideal
for creditors who are prepared to wait
for their money. The debt is only repaid
when the house is sold although should
the debtor be made bankrupt before the
house is sold you will have priority over
the unsecured creditors assuming the
house sale generates sufficient equity
to repay the prior charges secured and
your debt. A third party debt order to
be effective requires that on the date
of enforcement there are funds in the
account being enforced against.
Instructing a Bailiff or High Court
Enforcement Officer to take direct action
to seize the debtor’s property is, as
has been seen on television, a popular
choice with some creditors given that
the costs are recoverable from the goods
seized and its perception as being a
no nonsense approach sending a clear
message to other creditors who can
pay but won’t pay. No matter how many
debts you are owed when it comes to
taking action choosing the right adviser is
crucial. Debt Recovery and Litigation are
not the same. We have a specialist Debt
Recovery Department where matters can
be dealt with on a fixed fee basis or an
hourly rate. It is about the right person
conducting the litigation, giving you the
right advice.
By Darren Stone
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