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Catherine Rickett, Debt Recovery Manager
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Customers who do not pay on time reduce your profits and can put your business at risk.
Chasing these debts can be highly time consuming and frustrating, taking you away from the vital job of running your business. However, with the right legal support, it is often possible to recover business debts quickly and cost-effectively, unlocking vital funds for your operation, while saving you a lot of time and stress.
Our highly respected Debt Recovery team has been supporting local, national and international businesses for over 15 years, including leading blue chip and utility companies. We also receive instructions from major financial firms such as KPMG, Deloittes, PWC, etc.
We are recommended by the Legal 500 for our Debt Recovery Services which states that our Debt Recovery team offers "An exceptional standard of service".
Our commercial debt recovery solicitors understand the need to balance securing outstanding payments against preserving positive business relationships, so we tailor our approach to your priorities. In most cases, a friendly but firm approach from a solicitor is enough to prompt most people to pay an outstanding debt, without causing unnecessary conflict or ill will.
We have four local offices spread across Cambridgeshire, Lincolnshire and Nottinghamshire, so for expert business debt recovery support, please contact your nearest Roythornes office in Nottingham, Peterborough, Spalding, Alconbury or Birmingham.
The team has built close relationships with existing clients with a view to being seen/treated as an extension to their own internal credit control department.
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For many debts, we can offer a fixed cost recovery service, based on producing and sending a demand letter to the late payer. This is highly effective for most debts as knowing a solicitor is involved will typically act as a strong incentive for most people to clear their debt.
We offer bulk debt recovery services for a number of businesses and organisations that have outstanding debts from a large volume of individuals or other businesses. By providing an efficient, streamlined volume debt recovery process, we can swiftly and cost-effectively unlock significant capital for your organisation while saving you from a significant administrative headache.
Where required, we can pursue court proceedings for you to recover a debt. This will involve submitting a claim to the relevant court, setting out who owes the debt and how much it is worth. We can also add any interest owed on the debt and a contribution to your legal fees to the value of the claim.
If the debtor challenges the claim, we can represent you in court and ensure your case is presented effectively, giving you the best chance of securing the right outcome. If necessary, we can also apply for a County Court Judgment (CCJ) against the debtor and apply for various enforcement actions to enable recovery of the debt.
Before pursuing court action, we will make sure you are fully aware of exactly what this involves, including all of the relevant costs and timeframes. You can then make an informed decision about how you want to proceed to best serve your business interests.
While most business debts can be recovered effectively with the right approach, it is obviously far better to avoid this situation in the first place. Our solicitors can review your current credit control processes and advise you on any steps you can take to improve how you deal with late payments internally. This can significantly reduce the number of overdue payments you experience in future, saving you time and money.
There is a fine balance to strike when deciding whether to pursue a debt. On one hand, not all debts may appear to be worth the time or money to pursue. However, on the other hand, you do not want to set a precedent that allows your customers and clients to take advantage of you.
As part of our debt recovery service, we can provide advice on whether it is commercially realistic to pursue a debt and your options for proceeding. In most cases, we can engage the debtor in settlement discussions for a reasonably proportionate cost.
If it becomes clear that the debtor will not pay or engage in negotiations, we can provide further advice about starting legal proceedings, the costs involved and whether (in our professional experience) you are likely to see results. That way, you can make an informed decision about how to proceed.
We can talk you through a wide range of options from informal negotiations to litigation. Our expertise includes:
Informal settlement discussions – we can liaise with the debtor on your behalf to see if we can find a solution to the issue. This is usually a good option if you want to preserve the business relationship.
Pre-action negotiations – this involves sending a letter before action (also called a letter of claim or pre-action protocol letter) to the debtor to formally request repayment of the debt.
This is the required precursor to starting legal proceedings. However, with our negotiation skills, we are often able to persuade the debtor to agree to a settlement bringing the matter to a close at this stage.
County court money judgment proceedings – we can provide advice on applying to court for a County Court Judgment (CCJ). Depending on the response from the debtor, this process can be fairly straightforward – if they admit liability for the debt or do not respond to your claim, you can simply apply for ‘judgment by admission or judgment in default’ respectively to receive a CCJ in your favour.
If the debtor objects to your claim, wholly or in part, the claim can become more complex. At this stage, we can provide further advice about strategy and whether proceeding with the claim is commercially viable.
Charging Order proceedings – if you obtain a CCJ, we can provide advice about securing it over the debtor’s assets by way of a Charging Order. This means, if the debtor later sells the asset or they become insolvent, you will be prioritised and have a strong chance of recovering some or all of the debt.
Enforcement proceedings – you can also enforce a CCJ by instructing county court bailiffs or High Court Enforcement Officers to go to the debtor’s premises and recover the debt.
Insolvency proceedings – where the debtor cannot pay because they are insolvent, we can provide advice on making them bankrupt (if they are an individual) or winding up their business (if they are a company).
If you are an unsecured creditor, it means that you cannot rely on any of the debtor’s assets as ‘collateral’ for the debt, such as a property or shares in a company. If the debtor becomes insolvent, you may be unable to recover your money and you will be a lower priority than the secured creditors.
The vast majority of debts are unsecured. However, if you obtain a CCJ, we may be able to secure the debt over the debtor’s assets by way of a Charging Order. This can strengthen your position considerably.
If you are a secured creditor, it means that you have a charge over some of the debtors assets, e.g. their home, their car or shares in their business. Secured creditors are often called ‘priority creditors’ because when the secured asset is sold, you will recover your money before any unsecured creditors. This is the same if the debtor becomes insolvent.
There is also a priority among secured creditors. E.g. if you have a Charging Order over a property that is a second charge behind a mortgage, the mortgage lender will recover their money first.
For unsecured debts, you have 6 years from the date of the debt or from the date the debtor last acknowledged the debt to start a legal claim.
For secured debts, you have 12 years from the date of the debt or last acknowledgement of the debt.
Once time has run out, you may be unable to recover the debt unless you can get permission from the court to pursue it. If you are concerned about running out of time but are unsure about whether to pursue the debt, we can provide advice about the steps you can take, including liaising with the debtor on your behalf to persuade them to acknowledge the debt.
You can charge the rate of interest that is written into your original payment terms with the debtor.
If the debt is with a business, you may also be able to seek ‘statutory interest’ at a rate of 8% + the Bank of England base rate (but not if a different rate of interest is written into the contract).
If someone has signed a personal guarantee for a business debt, you can pursue them directly for repayment if the business defaults on repayments.
We can provide further advice on the terms of personal guarantees, whether it is enforceable in the circumstances and whether it may be appropriate to pursue the guarantor.
There are several stages to getting a Charging Order:
We can handle every stage of this process on your behalf, ensuring that all applications are submitted in a timely manner to prevent the debtor from selling or transferring the assets before your debt can be secured.
For immediate assistance recovering an outstanding debt owed to your business, please get in touch with our highly experience debt recovery solicitors in Nottingham, Peterborough, Spalding, Alconbury or Birmingham.