Newcastle Solicitors

Debt Recovery FAQs

Why should I use a solicitor for debt recovery?

Debt recoveries have become very commonplace and in many instances, they use an approach which is not properly tailored to the circumstances and does not take into account your wishes to maintain the pre-existing relationship that you have with the debtor. It is also very common for debtors to ignore debt recovery agencies.

Using a solicitor enables you to tailor the approach you take, allowing you to save the relationship between you and the debtor if you want to and ultimately gives you a better chance of getting your money back.  Contact from solicitors usually makes the matter appear to be serious and one that requires the attention of the debtor.  Wanting to avoid costly litigation and the stress involved, the debtor will in all likelihood pay back the money.

How does the size of the claim influence the process of claiming through the courts?

If the debtor refuses to pay up, the next step to take may involve taking the case to the county court.  The court has three tracks and which on is taken depends on the size and complexity of the claim.  For simple cases involving sums up to £5,000, the small claims track will be used.  For amounts between £5,000 and £25,000, fast track will be used.  For complex disputes and amounts over £25,000, multi-track is used.

I have a small claim.  Tell me a little bit more about the procedures involved.

Small claims are fairly easy to deal with, less formal than full-blown litigation and require fewer preparations than cases involving amounts over £5,000.  However, as a minimum, both parties will be expected to have exchanged witness statements and documents prior to the hearing.

Unlike normal litigation, small claims procedures do not usually award legal costs and evidence is not given under oath.

What is a statutory demand?

A statutory demand gives a debtor 21 days to pay a debt or 18 days to have the demand set aside. If they do not pay up within 21 days or have the demand, a bankruptcy petition can follow, although in the vast majority of cases, bankruptcy does not ensue.  For a statutory demand to be made, you do not have to go to court.

Are statutory demands useful?

Using a statutory tends to be a high risk tactic that is used to scare debtors into paying a debt.  However, if not used properly and the debtor understands the reasons as to why you are using a statutory demand, it could make getting your money back even more difficult.

When should a statutory demand be used?

Statutory demands can be made against companies and personal debtors alike (friends, family etc.).  They are not procedures that can be used to circumnavigate the court and as such they are technically not a prelude to bankruptcy.  Only the court can impose bankruptcy.

If possible, you should be prepared to take the claim to court following the issue of the statutory demand.  If you do not follow up, the creditor may ignore your subsequent requests altogether and should you later decide to take the claim to court, the court will not look kindly on you using statutory demands as a scare tactic.  If the amount is below £750, then a statutory demand should not be used, as this is the minimum amount required for a bankruptcy order.

What tactics can debtors use to thwart statutory demands?

It really depends on the circumstances, but in general, there are three possibilities. The debtor may try to reduce the debt below £750 to avoid bankruptcy orders.  If the debtor believes that there is a genuine dispute or the claim of the creditor is altogether unlawful, he might try to have the demand set aside within 18 days.  If there is no issue and the debtor accepts the legality of the claim, he may try to settle the debt with the creditor.

It must be remembered that the law is applied equally.  If the debtor is seen to be using deliberate tactics to thwart your claim, the court will not look kindly on this, which should benefit you.