If you’re worried that your debtor will never pay you back, you can start a debt recovery process in the UK. Typically, debt recovery in the country has four main stages – Letter before Action or LBA, issuing court claims, attaining a CCJ or Country Court Judgement, and enforcing a CCJ. Other steps might include Insolvency Proceedings if required. Usually, debtors pay off the borrowed amount at the first stage, requiring no further action. However, in some instances, you might need to go all the way to collect what you are owed.
So, let’s explore the four stages of debt recovery in the UK!
Debt Recovery in the UK
Here’s what you need to know about the four stages of debt recovery in the country:
Letter before Action
Before starting legal proceedings for debt recovery, you should send a letter before action to the debtor. It’s a formal letter that requests them to pay the amount they owe you and warns them of the court claim that will follow if they don’t. It details the amount owed to you from the debtor and provides them with a time, typically seven days, to pay that amount. It’s the essential first step of the debt recovery process. You might have to forfeit the costs if you start legal proceedings without the letter.
Legal Court Claim
When you don’t receive a satisfactory response to your LBA, you can start the next step of the process by issuing legal proceedings via a County Court. This way, the debtor will receive a court form demanding them to pay the debt, interest, and related costs within 14 days. You might also receive compensation of £40 – £100 per invoice with your claim if the Late Payment of Commercial Debts (Interest) Act 1998 is applicable in your case. You will need the expertise of a seasoned lawyer to check the claim and then send it to the court for further action.
Obtaining a CCJ
A CCJ is a court order that confirms the debtor has defaulted on their payment. A Country Court Judgment is the final decision by a court, and it gives you the power to enforce action to collect your debt. It’s recorded against the debtor’s credit record, affecting their future chances of obtaining credit. You can acquire a CCJ directly after the expiry date of your court claim.
Enforcement of the CCJ
Once you have obtained a Country Court Judgment, you can immediately enforce the debt. Take the legal advice of an experienced debt collection attorney on the best way to enforce the debt so that you have the highest chances of success.
You can use multiple methods based on the particulars of your case. If you work with a competent lawyer, they will find precedence for your case and guide you toward the method that will be the most successful in helping you recover your debt quickly.