We have summarised all of the essential information in the FAQ’s below. If you are unable to find the answer to your specific questions, please contact the BW Legal business team directly.
When and how do I begin taking legal action?
The first step is for us to send your customer a formal letter asking for prompt payment of your debt, warning them that we will take legal action on your behalf if they fail to pay. We will give the customer a clear due date, letting them know you will take legal action if payment is not received by the date specified.
If you hope to continue doing business with the debtor, it is worth giving careful consideration to the wording of the letter and the individual to whom you intend to send it. We can of course help to advise you on this point.
What legal choices do I have?
The court procedure you follow will depend on the amount of the debt:
- Small to medium debts are recuperated through the County Courts while larger claims are pursued in the High Court.
- For debts up to £10,000, the court case is assigned to the ‘Small Claims Track’. This is a simple, informal and inexpensive process for solving disputes in the County Court.
- Disputed claims between £10,001 and £25,000 are dealt with by the ‘Fast Track’ procedure, also through the County Court.
- Claims for over £25,000 use the ‘Multi-Track’ procedure, and can be issued in the High Court. These involve more formal and complex procedures, and can involve substantial expenses.
- For undisputed debts of more than £5000.00, you can issue a “Statutory Demand” which is a formal demand for payment in a specified format. If the debt is not paid within 21 days, you can petition the court to bankrupt the individual or wind up the company which owes you money. The prospect of being “wound up”, or made bankrupt, can be more effective than standard court procedures. However, this procedure should not be used if there is a genuine dispute.
I already have obtained judgment but the debtor will not pay
For a number of debtors, a Judgment alone is not enough to induce payment. At BW Legal, we are experts in both County Court and High Court Enforcement. We have a wide range of options in respect of individual and commercial debtors. These can range from freezing debtor’s bank accounts, having payments deducted from their wages, placing a charge on their property or removing their goods. We will tailor any enforcement to the suitability of the debtor and your business needs.
Does it matter whether the debtor is an individual, small business, large company or public sector organisation?
Generally speaking, the likelihood of recovering your debt will be determined by the legal company structure of your customer.
- Individuals and smaller businesses are often more likely to experience cash flow challenges, and therefore be less able to pay you even if you do win a court case. Public sector organisations may be concerned about adverse publicity, plus their debts are guaranteed by the government
- Sole traders are liable for their own debts, so they may be worth pursuing if the individual has significant assets, even if his or her business is struggling. We can carry out pre-litigation checks to assist with your understanding of the financial status of the party you want us to pursue.
- The larger the organisation, the more likely it is that their debt problems result in part from their internal communication problems and they may take advantage of their financial strength, threatening to take their business elsewhere, usually delaying payment or dragging out court disputes.
It may be the case that a personal guarantee is in place, in which case, proceedings can be issued jointly against both an individual and a company.
Why should I use a Debt Recovery Solicitor instead of a Debt Collection Agency (DCA)?
Solicitors are authorised and regulated by the Solicitors Regulation Authority and are required to maintain a properly audited client account. They must also have professional indemnity insurance, which protects you if things go wrong. DCAs are not regulated in this way.
In addition, Solicitors can provide a seamless transitional service in the collection cycle from pre-action communications to the debtor and thereafter we can take court action by issuing legal proceedings on your behalf. DCAs are not authorised to issue court proceedings. Many of them advertise legal services, but if they carry out litigation on your behalf they are likely to be committing an offence under the Legal Services Act 2007.
Why use a specialist debt recovery solicitor rather than a high street firm?
We offer a tailor made service to meet your specific business needs as we recognise that successful and economical debt recovery does not come from a “one size fits all” approach. We differ from High Street Law firms in that we will take time to understand your business needs and implement procedures, methods and pricing structures to best recover your debt.
What is an ABS?
BW Legal is an ABS or “Alternative Business Structure”, which is a modern type of law firm. It allows non-lawyers from the business sector to own and manage legal service businesses.
This means a much wider base of experience and outlook and allows us to bring a blend of skill-sets to our clients. Our core management team haven’t just worked in legal services, they have worked in corporate environments, wholesale food and distribution; hotel and leisure; telecommunications; commercial recoveries; construction, engineering; debt purchase and financial services.
Our commercial approach, honed through business experience, goes hand in hand with compliance and regulation within an ABS, so that our clients can be sure we meet their needs, protect their reputations and give them the best possible value for money.
How much do your legal services cost?
We offer a number of funding arrangements, including time spent / hourly fee, fixed fee and conditional fee agreement. This means we can agree a no-win no-fee pricing structure. The cost depends on the size, age and complexity of the debt.
Contact Us Today
Speak to one of our team today to see how we can help. 0113 468 3000