Debt Recovery

12 Nov 2009

The Problem 

In the current economic climate none of us can be complacent about the time which our clients or customers take to pay our accounts.  It is becoming a fact of life that suppliers of goods and services are used by their customers as a cheap source of credit. 

If you are to succeed in business you need an effective system to ensure that you are not the person giving free extended credit to your customers.  Those who take advantage of extended credit only push up the cost of your services to those good customers who pay on time. 

How We Can Help

Buss Murton Law LLP have recognised the need for a simple and effective means of ensuring that you are paid on time - and if you are not, you at least get some compensation for the delay. 

How It Works

Once you have reached the decision that polite reminders and statements from your credit control department are not producing results, just send us a copy of the relevant invoices and statements and leave the rest to us.  Don't leave it too long!

We will then log the debtor's details together with the invoices outstanding and the amounts involved and will send out a Letter Before Action requesting payment and warning that Court proceedings will be issued if payment is not received within seven days together with a warning that in those proceedings we will be claiming costs and interest on your behalf (you are also entitled to claim enhanced interest and statutory penalties on commercial debts). 

If that does not elicit a response in the form of a payment, proceedings will be prepared on the eighth day, or on a later day if you prefer.  We will then draft the Claim Form and Particulars of Claim, as appropriate, claiming the amount of your invoices plus interest (and penalties on commercial debts only) and both reimbursement of the Court fee payable and a contribution towards your legal fees.  This is then sent to the Court for issue and service.  Once the proceedings are served by the Court on the debtor, they then have fourteen days in which either to pay, or submit an Acknowledgement of Service, which will then give them a further 14 days by which to submit their Defence.  If they fail to do either we will request that the Court enters judgment against the debtor.  If no payments are received from the debtor then you will need to consider taking enforcement action against them, depending on the debtor's individual circumstances. 

Any debt up to the sum of £5,000 is treated as a small claim and therefore if the debtor defends any claim issued against them only fixed costs are recoverable.  Any debt over £5,000 that is defended (and where you are successful) reasonable legal costs can be recovered against the debtor. 

We also have available to us Money Claim Online (MCOL) through the Court's website which is an efficient and cost effective way of issuing proceedings.  One of the benefits of using this service is that the issue fees are slightly lower than detailed in the table overleaf.  However, once you give us your authority to proceed with issuing a claim we will advise you whether or not it is appropriate to use the online service available. 

Please bear in mind, however, that issuing a claim through the County Courts is not the only option available to you when trying to recover a debt.  You may, for example, prefer to issue a Statutory Demand or alternatively Bankruptcy/Insolvency Proceedings against the debtor.  We will, of course, be happy to discuss with you all of the options available to you together with the relevant cost implications so that you are in a position to make an informed decision prior to proceeding down a particular route. 

How Much Does It Cost

The minimum cost for the Letter Before Action stage is £150 plus VAT (please see the table below for an outline of our costs).

If we receive any correspondence from the debtor then we will obviously pass the same on to you for your information and instructions.  If you wish us to reply to the correspondence or to become involved in telephone calls on your behalf then our hourly charging rates will apply.  You are, of course, under no obligation to take the matter further prior to proceedings being issued. 

If no response is received to the Letter Before Action and you instruct us to continue with issuing proceedings against the debtor then we will draft a Claim Form and Particulars of Claim on your behalf and send the same to you for your signature.  We will, at this stage, require you to pay the Court issue fee, which is calculated on a scale depending upon the size of the debt. 

The Court fees and fixed costs incurred in issuing proceedings will be added on to the claim and will be recovered from the debtor if the claim is successful.  However, should we be unable to recover the debt for you then our fees will be your responsibility (please see the table below for an outline of our costs).

If the debtor fails to discharge the debt once the claim has been issued and does not defend the claim then judgment will be entered and enforcement action can then be taken.  There are various forms of enforcement available and the route that you decide to take will very much depend upon the debtor's individual circumstances. 

The table below indicates the level of the debt against the amount of the Court issue fee together with the amount of recoverable fixed costs:

 

Debt	Issue fee	Recoverable fixed costs and Court fee	Buss Murton Law's fee	Cost to You
up to £300	£30.00	£80.00	£150.00	£70.00
£300.01 to £500	£45.00	£95.00	£165.00	£70.00
£500.01 to £1,000	£65.00	£135.00	£215.00	£80.00
£1,000.01 to £1,500	£75.00	£155.00	£235.00	£80.00
£1,500.01 to £3,000	£85.00	£165.00	£245.00	£80.00
£3,000.01 to £5,000 *	£108.00	£188.00	£273.00	£85.00
£5,000.01 to £15,000	£225.00	£325.00	£420.00	£95.00
£15,000.01 to £50,000	£360.00	£460.00	£575.00	£115.00
£50,000.01 to £100,000	£630.00	£730.00	£880.00	£150.00
£100,000.01 to £150,000	£810.00	£910.00	£1,075.00	£165.00
£150,000.01 to £200,000	£990.00	£1,090.00	£1,265.00	£175.00
£200,000.01 to £250,000	£1,170.00	£1,270.00	£1,460.00	£190.00
£250,000.01 to £300,000	£1,350.00	£1,450.00	£1,660.00	£210.00
£300,000+ (or for an unlimited amount)	£15,30.00	£1,630.00	£1,860.00	£230.00
* Up to £5,000 is classed as a small claim.  In a defended claim only fixed costs are recoverable on a debt up to £5,000.  On debts over £5,000 reasonable legal costs are recoverable, which if not agreed with the debtor are subject to detailed assessment.

Next Step

We strongly recommend that you do not delay any longer.  Bad debts waste your time, energy and your company's profitability.   Buss Murton Law's debt collection department will give you a fast, effective and economic way of clearing your overdue accounts - leaving you free to concentrate on managing your business.

So if you would like to leave the worrying to us, please telephone Andrew Linton or Gemma Barker on 01892 510222. 

What To Consider

Although we believe that the use of Buss Murton Law will significantly improve your chances of recovering money owing, we cannot guarantee successful results every time.  The debtor may become insolvent, disappear, have insufficient funds or goods to satisfy the claim, or he may successfully defend your claim.  However, we can monitor the situation and give you early advice if your chances of recovering the debt look slim. 

If the outstanding debt is already, or is likely to be, disputed by the debtor our basic service will not be appropriate.  In this instance we will pass your instructions to our litigation department who will be able to provide you with a cost estimate for our likely charges in dealing with the matter.  If the claim is defended, our litigation department is fully qualified to deal with the matter and will give you sound advice as to how to proceed with the claim and details of the associated costs.  If successful, you will be able to recover your reasonable legal costs from the debtor. 

Andrew Linton is a partner in Employment and Litigation and can be contacted on 01892 502323 or alinton@bussmurton.co.uk

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