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Debt chasers urged to take correct course in recovery race
Article date: 09/07/2009
Businesses across the Black Country are being urged to take one of three simple actions when recovering debt - or risk 'throwing good money after bad.'
Leading Midlands law firm Higgs & Sons has outlined a three-pronged approach for companies across the region, as the firm reports more and more dispute resolution cases.
Dispute resolution specialist Julia Lowe said that if a business or individual is owed money from a debtor, then the options of pursuing through county court, serving a statutory demand or simply writing it off are most common.
Julia, who has built the largest dispute resolution team in the region, did stress however, that a legal claim was best kept as a last resort.
She said: "Before you commence any formal action you should first consider sending the debtor a letter before action. This is a formal letter setting out details of the debt and demanding that it be repaid within a certain time.
"If the debtor fails to pay up, as creditor you have three options. You could pursue the debt through the County Court, serve a statutory demand or simply just write it off.
"Notwithstanding mediation or some other form of resolution of the dispute, the County Court offers three procedures for settling disputes. The procedure that applies will generally depend upon the amount of money claimed."
Higgs also remind businesses to consider a statutory demand as formal demand for debt under the Insolvency Act.
Julia added: "If you've already obtained judgment against the debtor you may enforce it by serving a statutory demand. You could however use the statutory demand mechanism as a stand alone alternative to court action if the debt is not in dispute and is for at least £750.
"Statutory demands should be taken seriously. Once served it requires the debtor to either pay the amount claimed plus interest; pay an amount which reduces the debt to less than £750; offer to secure it against property; offer to repay the debt in a way that is satisfactory to you or apply to have the statutory demand set aside."
Whilst a statutory demand is often cheaper and more efficient than going down the county court route, businesses should be aware that a debtor can apply to court to set it aside if there is a substantial dispute over the money owed.
"Whichever route you take to recover a debt you should carefully consider the advantages and disadvantages of the available methods.
"If you are unsure of your options or the prospects of success of your claim you should seek specialist legal advice, otherwise you could be throwing good money after bad."
For more information about Higgs' dispute resolution department contact Julia Lowe on 01384 342100.