How to Recover a Debt

How to recover a debt. Regardless of your business size or turnover, the chances are that you have at least one invoice which has not been paid. An unpaid invoice is money in someone else’s pocket for goods or services you have provided. We are here to help you recover what is yours.

  • Unpaid invoices can restrict the growth and development of your business.
  • Unpaid invoices may lead to you becoming overdrawn and incurring bank charges.
  • Unpaid invoices can destroy your business.

Contact the person who owes you money

In the first instance, you should write to the person who owes you money.

You need to set out:

  • how much they owe you
  • whether interest is incurring
  • why it is owed to you – the origin of the debt
  • evidence of the debt
  • details to allow for payment

In addition, you should tell the debtor when you expect payment and what you intend to do if payment is not received.

This is known as a Letter Before Action (LBA) and should be in dated letter form and posted to the debtor.

Once posted, there is a 30-day window for the debtor to reply before you can issue court proceedings.

If you don’t send a LBA, you may not be able to recover your legal costs. Bear in mind that if the person who owes you money is an individual or sole trader then you cannot send a LBA but must instead follow the Pre-Action Protocol for Debt Claims (see below). 

The Pre-action Protocol for Debt Claims

The Pre-action Protocol for Debt Claims (https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/debt-pap.pdf) came into force in 2017 and encourages the sharing of information between the parties to hopefully provide a level playing field.

This Protocol’s aims are to:

(a) encourage early engagement and communication between the parties, including early exchange of sufficient information about the matter to help clarify whether there are any issues in dispute.

(b) enable the parties to resolve the matter without the need to start court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure.

(c) encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (for example, avoiding running up costs that do not bear a reasonable relationship to the sums in issue).

(d) support the efficient management of proceedings that cannot be avoided.*

This Protocol was supplemented in May 2021 when the Debt Respite Scheme (https://www.legislation.gov.uk/ukdsi/2020/9780348209976/contents) came into existence. Under the regulations, an individual who is not VAT registered or a small trader can seek to pause any collection for a 60-day period.

If someone is not going to pay you, it is unlikely that writing to them three or four times is going to have any great impact so best not waste your time. Write to them once and, if they fail to respond or comply, simply move on and obtain the help you need to secure payment of the debt.

Instruct Solicitors

Cohen Cramer solicitors have the knowledge and experience to recover what is owed to you.

To see how we can help with your debt recovery get in touch with us today:

How we can help

We will initially send a LBA in accordance with the Protocol. While you can do this yourself, we have found that people are more likely to respond to a solicitor’s letter than to the party to whom they owe the debt.

If the LBA doesn’t draw a response, we don’t waste your time by sending further chaser letters; if there is no compliance within the stated period, then we will issue proceedings through the County Court. The debtor will receive notification from the court that payment is due with 2 weeks. The debtor can then choose to:

  • Submit the Response Pack requesting a 4-week stay to allow them to prepare a Defence if they dispute the debt
  • Submit the Admission Pack agreeing to all or part of the debt together with their offer of payment
  • Submit a Defence and Counterclaim disputing the debt and seeking instead to recover money from you. 

Should the debtor fail to respond, then we will request a County Court Judgment (CCJ) against them. The debt can then be enforced via a variety of means (link to sep page in relation to debt enforcement)

We can deal with your debt recovery on a no win, no fee basis so that if we are unable to recover your debt you don’t pay us a penny. If we are successful, we retain an agreed percentage of the sum recovered.

 Our fees are as follows:

  • 15% if the sum recovered is £1,000.00 or less;
  • 10% if the sum recovered is between £1,000.01 and £1,500.00; and
  • 5% if the sum recovered by the Client is £1,500.01 or more.