Debt Recovery: A Creditor’s Guide to Recovering Unpaid Debt

If you have rendered an invoice to an individual, and the debtor has not paid the invoice, then you will need to consider debt recovery options. A creditor’s approach to debt recovery will vary depending on the individual circumstances of the case. In some circumstances, a warning letter or email from solicitors will induce a debtor to pay what is owed. Should this be fruitless, then a statutory demand can be issued (which is the pre-cursor to legal action for an unpaid invoice). Should the debtor still not pay, then a creditor has the option to issue a bankruptcy petition. There are many ways to get money owed for an overdue invoice.

To date, we have a 100% success rate and all of the petitions we have issued have been resolved in our client’s favour. This has also meant that the petitioned individual has paid our fees. Luckily for our clients this means instructing us to pursue their bad debts has ultimately recovered the sums owed plus interest with a refund of their legal costs.

Are you owed debt by an individual?

If you are owed money by an individual, and the debtor has not paid the owed money, then you will need to consider debt recovery options. As a creditor your approach to debt recovery will vary depending on the individual circumstances of the case. In some circumstances, if you consider to have a Solicitor as a legal representative in some circumstances, a warning letter or email from your Solicitor will instigate an individual to pay what is owed to you. However this might not be the case and then, a statutory demand can be issued as a first step of legal action for owed money.

Furthermore, if the individual still does not pay, then as a creditor you have the option to bankrupt the individual (if owed at least £5,000 or above) by serving a bankruptcy petition to a court to recover what you are owed as a form of application where you can apply for someone’s assets to be taken to be sold to pay any debt to you are due. There are many ways to get money owed for an overdue invoice and with our Bankruptcy Solicitors these ways can been seen less complicated as it seems.

How can you recover debt from an individual who won’t pay?

You can get an individual to pay your debt in the following ways:

By sending a warning email or letter so that the debt can be paid without any legal action being taken place.

  • Threaten legal action in a letter of claim;
  • Negotiate a payment plan with the Individual;
  • Instruct solicitors to correspond with the Individual;
  • Issue a statutory demand: Which is a document outlining a creditor’s claim against a debtor; or
  • Serve a Bankruptcy petition: Which is form of application to the court where you can apply for someone’s assets to be taken to be sold to pay any debt to you are due.

What happens if the Individual won’t pay the debt: Letters before action

As a creditor you should consider sending a Letter of Claim before commencing court proceedings.

The following information should contain in the Letter of Claim is the amount of debt that the individual owes you and if interest or other charges are applicable;

If the debt arises from an oral agreement then who made the agreement, what was agreed, where and when it was agreed;

Similarly if the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that you as a creditor if requested have a copy of the written agreement;

If any regular instalments are currently being offered to you by the individual then required from you an explanation of why the following offer is not acceptable and why a court claim is considered. you may be required on how the debt can be paid and the details of how to proceed if the individual wishes to discuss payment options.

The required address where the completed reply form should be sent and enclosed up to date statement of account of the debt owed which can include interest, administrative charge or other charges added.

Can I claim debt recovery costs from the Individual if payment has be made late?

Yes. As a creditor you can claim debt recovery costs on if you have supplied goods or services, if the contract is not a consumer credit agreement and if the contract does not have a provision of interest.

Legal Action: What is a Statutory Demand?

A statutory demand is a document outlining a creditor’s claim against a debtor. The statutory demand is intended to be relied upon in further legal proceedings against you (to bankrupt an individual) and which ought to:

  • provide details of the financial claim, with interest calculated to the date of the demand;
  • be served on you as debtor personally or by post; and
  • tell you what to do to comply with the demand, have it set aside and the consequences of doing neither.

The format must follow the guidelines set out in the Insolvency Rules 1986, but it is not a court document.  Although the demand is dated at the time of issue, it does not expire.  The time limits to deal with a demand only apply from the date of service.

How should I serve a statutory demand?

Most creditors often serve statutory demands as it s more cost-effective or a faster method to ensure the individual pays the debt and not initally instigate court proccedings.

Once the statutory demand is served a the debtor has 21 days within which to pay the debt.

Moreover, a statutory demand carries a threat of bankruptcy which is effective as the debtor will then focus on to ensure the payment of the sums is to be made or negotiate settlement engagements.

However, if in 21 days the debt is not paid then a bankruptcy petition should be served where creditors can instigate funds from the individual’s asserts being sold.

Legal Action: What is a bankruptcy petition?

bankruptcy petition is a form of application to the court where you can apply for someone’s assets to be taken to be sold to pay any debt to you are due. By our expert Bankruptcy Specialist presenting a petition can be less complicated as it seems.

How to issue a Bankruptcy petition?

The following must be done when issuing a bankruptcy petition:

When making someone bankrupt you must be owed at least £5,000 or a share of debts that total at least £5,000 and to do so you must provide evidence to the court that you are owed this money. This can be proven by if you have issued a statutory demand to the debtor and can confirm this by filing the in a service of the N215 form.

Additionally, you can get bailiff’s or sheriff’s statement showing that the bailiff or sheriff was not able to recover enough asserts to pay the debt or if you have a court judgement for the money owed.

bankruptcy petition must be served personally on the debtor at least 14 days before the date of the hearing.  If prompt personal service cannot be effected because the debtor is keeping out of the way or for some other reason, you can apply to the court for an order for substituted service (which may be by posting or leaving the document at a given address or by advertisement).  A certificate of service must be filed with the court as soon as practical after service and in any event 5 business days before the hearing.

What happens when serving a bankruptcy petition?

The bankruptcy petition must be served personally on the debtor at least 14 days before the date of the hearing and a Certificate of Service or Statement in Support of Substituted Service is required as proof of service.

Bankruptcy Hearing? Need legal representation?

Once the bankruptcy petition is served, the Court is involved and a date will be set for a bankruptcy petition hearing.

At the hearing, you as the creditor that must attend or have legal representation in there instead. Other creditors will also have a right to attend the bankruptcy petition hearing where the list of creditors is provided to the court in advance.

Will COVID 19 affect the process on serving a Bankruptcy petition?

In order to present a petition you have to first do searches which include going to the Rolls Building of the Royal Courts of Justice and manually searching the computers there to see if HMRC or any other Government department have issued petitions against the individual. If you cannot go there to do those searches anymore, You cannot bring a bankruptcy petition right?

Wrong. You can check for petitions presented if you contact the county court for the area where the debtor lives and they’ll advise you how to check for petitions which can be done by your legal representative if instructed as the solicitor has authority to do it then yes.

Once the checks have been made you or your legal representative then you must confirm you’ve carried out the searches by writing in a declaration and attach it to your petition form.

We are lawyers that specialise in recovering unpaid debts from individuals or companies so we know the best way to get your unpaid debts paid up quickly. This may involve Insolvency or Litigation proceedings.

As a result of our success we are now able to offer clients a proactive debt recovery package for a small fixed fee (which is likely to be refunded!).

Meet our Expert Bankruptcy Lawyers

We specialise in personal insolvency dispute litigation. We’re a specialist City of London law firm made up of Solicitors & Barristers. We are based in the legal heart of London in Middle Temple next to the Royal Courts of Justice (where the Central London County Court (Bankruptcy) is based). We’re experts in dealing with matters surrounding personal insolvency including issuing and setting aside statutory demands, issuing and opposing bankruptcy petitions; and managing bankruptcy applications (including annulments).

Whilst we are based in London we provide national coverage across all Courts in England & Wales. We provide a quick no cost initial telephone case review to establish whether or not we can help you; just call one of our team on 02071830529

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