Do you want your money back?

If you are owed money by a client or a tenant and you have attempted to contact the debtor but have not received a response or the debtor has failed to pay the debt despite promising to do so, you can issue legal proceedings to recover the debt (a debt recovery claim).


When pursuing a debt recovery claim, you need to be satisfied that you have a reasonable chance of recovering the debt and that recovery of the debt will justify the time and expense of pursuing the debt. On occasion, it may make commercial sense for a creditor to write off smaller debts, but each case has to be considered on its merits and on a case-by-case basis.


What is a Pre-Action Protocol letter?


The general procedure where the debtor is a consumer is for the creditor to comply with the Pre-action protocol procedure by sending a “Pre-Action Protocol” letter to the debtor. A Pre-action protocol is the conduct that the court expects both parties to undertake before commencing proceedings as set out in the Civil Procedure Rules (CPR).


There are several Pre-action protocols for different areas of claims. A Pre-action protocol letter is a legal letter written by the creditor to the debtor to try and resolve a dispute before commencing court proceedings. The letter will set out the factual and legal basis of your claim and will include any relevant documents which can be used to support the claim. It will also detail how the debt can be paid off and ask the debtor to pay the money due by a certain deadline. If the debtor fails to meet the payment deadline the creditor can then issue proceedings for recovery of the debt.


The pre-action protocol procedure allows early exchange of information between the parties with a view to dealing with disputes quickly, keeping legal costs to a minimum and saving the courts time.


The debtor is then required to respond to the ‘Pre-action Protocol Letter’ within 30 days of receiving it. The debtor can either:

  • Admit the claim

  • Make proposals for settlement or alternative dispute resolution

  • Dispute the claim


What if pre-action protocols are not followed?


Failure to comply with Pre-Action Protocol has legal consequences and will be considered in any court proceedings which follow. If the required pre-action protocols have not been followed, one of the most important legal consequence is that if either party fails to follow the protocol, they may be ordered to pay their legal costs and the other party’s legal costs even if they win the case.


What happens after sending a Pre-Action Protocol Letter?


Once the relevant Pre-Action Protocols have been followed, the next option would be to issue legal proceedings.


You can issue a Claim form against the debtor. You must always ensure that you put in as much information about the debt and the debtor as possible. Ideally you should have a copy of the written contact with the debtor. If there is no written contract as you agreed terms orally, you should still put in as much information in the claim form that would assist the court in understanding your claim and accepting that there is a debt owed to you by the debtor. You should always retain any communication or documents between you and the debtor, e.g. emails, letters and text messages about the debt, invoices and purchase orders.


After the Claim has been issued by the court and served on the debtor, the debtor will then have to decide whether they admit the debt and pay the debt or whether they want to defend the case. If they decide to defend the claim the court will give directions for the preparation and conduct of the case following which there will be a hearing.


Can interest be charged on overdue debts?


The contract with the debtor will allow the creditor to claim interest if payment is delayed. The contract may already specify a credit period and how and when interest will be charged.


However, where there are no written terms of credit or a contract which provides for interest, interest on commercial debts are covered by the Late Payment of Commercial Debts Act 1998 which provides that interest may be charged at a set rate of 8% plus base rate.


In regard to other charges which can be recovered from the debtor, the contract may specify that the creditor may recover any costs of collecting the overdue debts, for example a fee for each time a client must be contacted in order to make a payment.



What takes place after Court?


Once a ‘County Court Judgement’ (also referred to as a ‘CCJ) has been obtained, you the creditor must take steps to enforce the judgment so that you can receive the money that you are owed.


If the debt is under £600 you may wish to instruct the County Court Bailiff. If the debt is over £600 you may wish to transfer the judgment to the High Court Enforcement Officer. The Bailiff or Enforcement officer will then attend the debtor’s premises and either obtain payment directly or take control of goods owned by the debtor to sell to recover the monies owed.


A CCJ remains registered for six years against the debtor so there is an incentive for the debtor to pay promptly once a judgement has been issued as if he/she does not pay the debt it might affect their ability to obtain credit.


How can Pure Business Law help?


We are specialist Commercial Debt Recovery Solicitors based in Bedford and London. We operate nationally.


If you would like legal advice on any of the issues that we have raised in this article or on our website, or would like to discuss our fee options including our fixed fee option, please contact us and speak with one of our special experts.

Our specialist debt recovery solicitors are experienced in resolving different types of debt disputes. Most of our cases settle out of court thereby helping you avoid litigation and high legal bills. Our solicitors can assist you with:


  • Initial telephone calls to the debtor(s).

  • Negotiating a settlement.

  • Preparing the initial letter of claim.

  • Preparing a pre-action protocol letter.

  • Issuing legal proceedings.

  • Attending court and obtaining judgments.

  • Enforcement of the judgment – via the bailiffs.

  • Mediation/Conciliation.

  • Arbitration.

  • Adjudication.

We are waiting for your call.


Pure Business Law is regulated by the Solicitors Regulation Authority(SRA) and is a licensed member of the Law Society of England & Wales.


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