Debt Collection & Enforcement

Home > Business > Commercial Disputes

Unpaid invoices and bad debt are a major concern for any business, having a significant impact on the cash flow of a business.  At tbi we can offer advice and assistance regarding all aspects of debt recovery, from sending initial letters to debtors to obtaining a Court Judgment for the outstanding amount. 

Depending on the individual circumstances we can usually carry out debt recovery for a fixed fee.

We can not only advise you on the merits of any claim, but we can also discuss the commercial reality of pursing a debt.  Issuing Court proceedings can sometimes cost more than the debt is worth and therefore we will advise you fully regarding the various options, so you can make an informed choice.  One of these options is to act in person at any Court proceedings in order to keep costs down, however, we would be happy to prepare the necessary Court documentation in order to assist you.

Once Judgment has been obtained, this does not automatically mean that the debt will be paid.  At tbi we can advise you on the various methods of enforcing the debt.  Please click here if you would like more information about enforcement proceedings.

At tbi we can provide the following services:

• Letters Before Action
• Issue Court Proceedings
• Represent you at Court in any hearings
• Draft Court documents
• Issue enforcement proceedings

We can also advise you on practical ways in which a business can minimise its bad debt, and maximise the amount you can recover through legal action.

Enforcement Proceedings

So, you have been to Court and got Judgment against the debtor, but its not simply the case of sitting back and waiting for the money to come in.  Obtaining judgment was the easy part!  The Court does not automatically enforce its judgments, or even help decide how they should be enforced.  It is up to you to enforce the debt, which unfortunately usually involves additional time and expense.   Whether your debtor has the means to pay your debt should have been investigated at the beginning, but in any event, you need to know the debtor's whereabouts and what assets he has got to make all this worthwhile.

One way of discovering your debtorrs assets is to hire a private investigator, though this can prove costly.  Alternatively, you can make an application to the Court for oral examination / Order compelling the debtor to attend for questioning.  Upon oath the debtor is examined about his income, expenses and assets.  Based upon this information you can either agree proposals for payment, or if the debtor refuses to pay then you can decide which methods of enforcement you wish to pursue.  You can pursue more than one method at the same time.

Third Party Debt Order

Where a third party owes money to the debtor, the Court can order that the money is paid to you instead.  The most common example of a third party debt order is a bank or building society account.  The Court can order that the account is frozen until you are paid the money that you are owed.  This is often useful for enforcing against debtors whose whereabouts are unknown as they usually contact you and offer to pay when they realise they cannot access their money!  In order to use this method of enforcement, there must be a bank account in the debtor's sole name and you need details of the account, such as account number, sort code and branch.  This information can be found on cheques and therefore it is advisable to photocopy any cheques received from debtors as a matter of course, before paying it into the bank. Just in case!

Instructing Bailiffs/High Court Enforcement Officers

If the debt is less than £600.00 then County Court Bailiffs are instructed to seize the debtors goods, subject to certain exemptions, in order to sell them and pay your debt and also the costs of enforcement.  High Court Enforcement Officers can be instructed if the debt is over £600.00 and are more proactive than County Court Bailiffs.  The Bailiffs and Enforcement Officers cannot force entry into a debtor's property or take goods from a debtor's person, but will often take "walking possession". This is where the Bailiffs agree not to remove the items and the debtor agrees not to sell them, to give the debtor the opportunity to pay the sum due.

Attachment of Earnings

This order makes the debtor's employer make regular deductions from the debtor's earnings and pay them to the Court.  Obviously, for this method to work, the debtor needs to be employed and has to owe at least £50.00.  The County Court is the only court who can make this order.

Charging Order

If the debtor owns their own property, whether on their own or jointly, then you can register a charge against the property to show that you have an interest in the sale proceeds.  However, you will not receive payment until the property is sold, although you can apply for an order for sale of the property. 

Bankruptcy/Winding Up Petition

If the debtor is unable or unwilling to pay as they have no money then you can issue insolvency proceedings against the debtor.  The first step is to serve a Statutory Demand which is a formal demand for payment.  This is served upon the debtor personally and if you have not received payment within 21 days then you can present a bankruptcy petition (individual) or winding up petition (company) to the Court who will make the Order.  A trustee is appointed to gather together all the assets and distribute them to the creditors, however, it is usually the case that there is not enough money to pay all the creditors and therefore everyone receives a certain number of pence in the pound.  Issuing insolvency proceedings can be very expensive and time consuming and may end up costing you money whilst other creditors benefit.

Which enforcement method you chose obviously depends on the individual circumstances of the debtor.  Sometimes it is worth instructing an enquiry agent at the outset to investigate the debtors assets and help decide which method of enforcement to use.  It could also save time and money in the long run if you discover that the debtor has no assets which to pursue, before going to the time and expense of issuing Court proceedings.