Debt Collection

Debt Collection

There is a voluntary code of practice in the UK which recommends that businesses pay outstanding bills within 30 days.

Although it is estimated by the Federation of Small Businesses that 50,000 businesses go bankrupt every year because of late payment, most businesses have not signed up and, therefore, do not follow the voluntary code.

It is essential for all businesses to manage their debt, and our experience is that the sooner a debt is chased, the better the chance of it being successfully collected.

A well-written solicitor’s letter, advising the debtor that action will be taken, if the debt is not paid, succinctly informs the debtor that the debt is being seriously managed and, therefore, payment should be made.

Extra charges can be levied on a debtor because of their failure to pay the debt in good time and, further, debtors need to be reminded that, if formal enforcement action is taken against them, their credit rating, or that of their business, may be affected.

In order to enable a business or individual instructing us to budget for the cost of debt collection, we will undertake recovery work for an agreed fixed fee for all straight forward debts up to £10,000.00*.

Please note, if the Defendant files a defence to a straight forward debt claim, alleging failure to pay is based on inadequate service or receiving goods which were not of a satisfactory quality, then we reserve the right to depart from the fee structure detailed below and to charge at our usual hourly rate of £200.00 per hour plus VAT (£240.00).  If this occurs, we will provide a tailored fee structure.

1. Initial meeting: Collecting and collating all information and sending a detailed letter of advice to the business or individual, and a fully compliant Letter before Action to the debtor, particularising the claim and advising the consequences of payment not being made, and thereafter recovering and passing on payment.

We would aim to send the letter before action as soon as possible after the meeting and, in any event, within 5 working days.

Our Fees:  £200.00 plus VAT (£240.00)

2. The County Court route: If the Letter before Action is not successful, and payment is not received, we will take your further instructions, check all information and draft and issue County Court proceedings.

Our Fees: Between £200.00 and £350.00 plus VAT (£240.00 and £420.00)

A fee must also be paid to the Court for issuing proceedings, and how much this is depends on the amount of the debt being pursued. Broadbrush, the fee is 10% of the value of the debt, without interest.

We will aim to issue proceedings within 5 working days of being instructed and in a position to check all the information with you. Unfortunately, we have very little control over the time the Court takes to deal with the claim after issue as it should be noted that the Court process is very delayed at the moment as a result of the Covid 19 pandemic which has reduced Court staffing levels.

3. Obtaining a County Court Judgment: If there is no response from the debtor, a County Court Judgment can be entered.

Our Fees: Between £25.00 and £75.00 plus VAT (£30.00 and £90.00)

4. If the debt is denied: And the matter goes to Trial, we will prepare and represent the creditor for a pre agreed fixed fee. The fee will be agreed after discussion regarding what evidence should be presented to the Court and how.

The fee will be based on an hourly rate of £200.00 plus VAT (£240.00).

5. Enforcement of the County Court Judgment: There are various enforcements, depending on the circumstances of the debtor. Again, we will act on a fixed fee.

Our Fees:

Charging Order: £500.00 plus VAT (£600.00)

Attachment of Earnings: £300.00 plus VAT (£360.00)

Party Debt Order: £350.00 plus VAT (£420.00)

High Court Enforcement: £200.00 plus VAT (£240.00)

County Court Bailiff: £100.00 plus VAT (£120.00)

Information Order: £300.00 plus VAT (£360.00)

Please note that all the above also attract Court fees of between £55.00 and £110.00. There is no VAT on Court fees.

Again, unfortunately, because of the issues with the Courts, it is not possible to give accurate timescales with regard to these procedures.

6. Alternative routes to issuing County Court proceedings:

• Insolvency route (for any debt over £750.00).
• Winding up Petition/Statutory Demand.

The fee will be based on an hourly rate of £200.00 plus VAT (£240.00).

7. Debts claimed of over £10,000.00 or complex debts: all claims of over £10,000.00 and complex debts will generally be charged on a time spent basis on our usual hourly rate of £200.00 per hour plus VAT (£240.00).

We will provide a tailored fee estimate once instructed.

Additional Information:

Anyone wishing to proceed with a claim should be aware that the VAT element of the solicitors’ fees cannot be reclaimed from the debtor.

*We are able to offer alternative fee structure dependent upon the particular circumstances of the client and the matter, for example if we are undertaking a significant amount of debt collection for one client, we may agree a different fee.

Interest and compensation may increase the debt to over £10,000.00.