Q&A: Debt recovery

Solicitor Kiranjit Virk of Tollers LLP answers key questions about recovering debts through the courts.

What options are offered at County Court for recovering debt?

The ‘small claims track’ is generally for claims worth less than £10,000 (lower limits apply to personal injury and housing disrepair claims). You’re entitled to recover your court fee and limited fixed solicitor’s costs, if you win. The ‘fast track’ is for straightforward claims below £25,000. A successful party could expect to recover 70% of their costs. The ‘multi track’ is for more complex cases worth more than £25,000. The Court is more flexible on recovery, but the same 70% rule applies.

When would a claim go to the High Court?

Generally, claims worth less than £50,000 are usually commenced in the County Court. However, cases might be commenced in the High Court because of: the value of the claim; the amount in dispute; complexity of the facts; legal issues/remedies for procedures involved; and/or the outcome of the claim to the public in general.

Can I prepare a claim and represent myself?

You can prepare and issue the claim at the court without legal assistance. The HM Courts Service website provides detailed guidance.

Can I claim legal aid?

Legal aid has been scaled back and it it only available in a limited number of cases. Before taking any action, discuss the merits of the case with a solicitor and ask if legal aid is likely to be available. Not all solicitors provide legal aid - much will depend on your circumstances and the facts of the case.

My case isn’t straight forward, should I hire a solicitor?

Most definitely, we can advise on the merits of any case and represent you thereafter. A debt-recovery agent will usually deal with undisputed debts – not contested court cases.

How important is it to have evidence?

Very - supporting evidence should be attached to the claim form. In a debt-recovery claim, an invoice will verify the value of the claim, what it relates to and when it should have been paid. Provide as much evidence as possible.

Talk me through the process...

Initially, before any formal action, send a letter to the other party and give them 14 days to respond. If they don’t, issue proceedings. Once the Court has issued the necessary documents, you can instruct the court to serve them or serve them yourself. You must allow two business days for service of documents by first class post, excluding bank holidays and weekends. The defendant has 14 days to acknowledge receipt from date of service. If they do, they have 28 days to file a defence. Where a defence is filed, the Court will notify you and send both parties allocation questionnaires, which provide the Court with more case information.

And then?

Once you’ve filed the allocation questionnaire, the Court will provide you with a timetable for the claim’s future conduct, including dates by which you must exchange documentary evidence and submit witness statements. At this point, the Court will also notify you of a hearing date and give you directions to prepare the matter for the trial. If the defendant doesn’t comply with the timescale, you can request judgment in default. Otherwise, the matter proceeds to trial.

What happens if the Court finds in my favour?

Unfortunately, there’s still no guarantee the defendant will pay, so you must enforce the judgment. The main methods are: ‘Warrant of Execution’ – depending on the value of the claim, either the bailiff in the County Court or the High Court Enforcement Officer can, upon warrant issue, go to the defendant’s premises to collect and sell their goods at auction. The next is ‘Attachment of Earnings’ – which requires the defendant’s employer to deduct a set amount from the defendant’s weekly/monthly earnings. ‘Third Party Debt Orders’ are common where businesses have trade debt from customers. They enable you to freeze and collect sums from the debtor.

Any others?

You can apply for a ‘Charging Order’ on land owned by the defendant. An application must be made to the Court and thereafter be registered with the Land Registry. However, the debt will not be released until the property is sold. Alternatively, if the debtor is a company and judgment debt is more than £750, you can issue a statutory demand for payment. If it isn’t forthcoming within 21-days, you can petition for winding up. Finally, if the debtor is an individual and the judgment debt is more than £750, you can issue a statutory demand for payment. If it isn’t forthcoming, you can petition for the debtor’s bankruptcy.