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Debt Recovery

London Debt Recovery

London Business Debt Recovery Lawyers

South Bank Legal’s business and commercial debt recovery lawyers routinely provide their business clients with cost effective debt recovery services. Our debt recovery lawyers will not blindly send out a template debt recovery letter but rather, will appraise the strength of the claim and the prospects of recovery before recommending the best approach.

For example, where a trade debtor is a company and is unlikely to be able to raise a genuine defence to the debt, it is worth considering preparing and serving a statutory demand under section 123(1)(a) or 222(1) of the Insolvency Act 1986. The statutory demand must set out key information about the debt, including when it arose, the goods or services provided to the debtor and the precise amount due. The statutory demand is then served on the debtor company who will then have 21 days to pay to avoid the risk of facing a winding-up petition. Statutory demands are therefore an effective tool for collecting uncontested business debts swiftly, as most companies who intend to continue trading will do all they can to avoid being wound up by the court.

Where the trade debtor is an individual, as opposed to a company, a statutory demand under section 268(1)(a) of the Insolvency Act 1986 may be served on the individual. The individual faces a bankruptcy petition if they fail to pay the debt within 21 days or make a successful application to set aside the statutory demand.

Debt recovery claims can however be less straightforward and not always suited to the statutory demand procedure. Perhaps the debtor can raise a genuine dispute about whether the debt is owed, or has a counterclaim against you which is at least as much as the debt. In these situations, to avoid the potential adverse cost consequences associated with the debtor successfully applying to set aside the statutory demand or restrain the presentation of a winding up petition, creditors would be well advised to initially pursue the debt using a letter before action. A letter before action is the precursor to County Court Claim for the recovery of money.

County Court debt recovery claims can also be made online, using the County Court Money Claims Centre. Utilising the Money Claims Online Service certainly has its advantages, in that the Court filing fees are lower and the process tends to be quicker, but the debt must be for a fixed sum and under £100,000 for the service to be used.

On 1 October 2017, a Pre-Action Protocol for Debt Claims came into force. The protocol will change business debt recovery procedures for businesses where the debtor is an individual. Relevant businesses should update their debt recovery processes, as the commencement of court proceedings without having complied with the protocol could very well lead to costs sanctions being imposed by the court.

South Bank Legal can talk you through the new Pre-Action Protocol for Debt Claims and ensure that any debt recovery steps your business takes are compliant. For a confidential discussion, please get in touch.