IVA Advice Guide – Collecting Debts owed to You

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Advice on Collecting a Debt that you are owed


IVA.TV have reproduced the Crown Copyright Guide on Collecting a Debt owed to you

Guide on Debt Collecting a Debt

How to recover a debt from someone who owes you money – Debt Recovery

A person or company that owes you money is your ‘debtor’. If they won’t pay, there are ways of recovering the debt. The action you take will depend on the size of the debt and your ability to prove that you are owed the money.

Contacting a debtor

When trying to recover a debt, you should first write to the debtor, setting out the facts of the situation. It’s important to include information such as:

  • who’s involved – the name and address of both you and your debtor
  • dated copies of all paperwork relating to the debt
  • a date by which you expect payment
  • a request for the debtor to put in writing any issue or dispute they have with your statement
  • details of the steps you’ll take if payment isn’t received

It’s important to:

  • be firm, but calm
  • stay within the law
  • send all correspondence by recorded delivery
  • keep copies of all documents relating to the debt; these may be used as evidence if you have to take legal action

Avoid:

  • being drawn into heated arguments or lengthy correspondence with your debtor
  • threatening legal action that you’re not prepared to follow up

Using a solicitor

If your debtor doesn’t respond to your letter or still won’t pay, it can be helpful to discuss your case with a solicitor who’s experienced in debt recovery.
For a fee, they can write a letter to your debtor informing them that legal action may be taken if they don’t pay. A solicitors letter can produce quick results.

Talking with a solicitor can also help define your case in legal terms and help identify further action that may be available to you.

Debt recovery agencies

Some companies specialise in debt recovery and will employ a solicitor to take legal action to recover your debt. They may charge a fixed fee or take a percentage of the money they recover on your behalf.

What to do if the debtor disputes the debt or refuses to pay

If the debtor fails to settle the debt after you have written to them, or if they dispute the debt, there are still options you should try before taking court action.

Taking your debtor to court (see ‘Recovering debts through the courts’ below) can be time consuming and expensive. Alternatives to court action include independent arbitration, mediation and ombudsman schemes (all known as ‘alternative dispute resolution’ (ADR)).

Recovering debts through the courts

If you can’t settle the matter in any other way, you may want to make a claim in court; it’s advisable, however, to seek independent legal advice first.

It’s important to remember that:

  • if your case fails and the court rules against you, you could be liable for your debtor’s costs as well as your own
  • a court is unlikely to make a ruling in your favour if it can’t establish the facts of the case (this won’t be necessary if your debtor hasn’t filed a defence)
  • if your debtor has filed for bankruptcy or gone into liquidation, your debt will be more difficult to recover

Where your case is heard will depend on how much money’s involved. It’s advisable to get legal advice if your claim is over £5,000.

Small claims court

For claims up to £5,000, you can represent yourself at your local small claims court. The court can rule on claims for specific amounts and issue warrants enforcing its rulings. However, it can’t award damages or compensation.

County Court

Claims for any amount can be heard in the County Court – no minimum or maximum limits apply.

High Court

Claims over £15,000 can be heard in the High Court. You must take legal advice and have a lawyer to represent you.

Claiming online

You can make claims for up to £100,000 online. The claim must be against no more than two people.

Enforcing a court ruling

If a court has decided that someone must pay you an amount of money and you haven’t received it, you can ask the court to enforce the ruling.

For further advice please contact IVA.tv on 0800 048 3651.

Information in the above IVA Advice Guides and Debt Advice Guides includes extracts from Crown Copyright Advice Guides Direct Gov UK