Money talks: Considerations before issuing a debt claim

by | Sep 1, 2017 | Blog Posts

It can be extremely frustrating when someone owes you money. However, many people are quick to throw themselves into the idea of suing someone for the money that is owed to them. It is worth considering the following before taking legal action and issuing a debt claim.

Can you settle the dispute between yourselves?

In the first instance, it is always worth having a chat with the debtor. If you give the debtor a chance to explain his situation, you may be able to resolve the matter amicably. For example, if he is coming in to money the following week, you could agree to wait until then. Or perhaps you might agree an instalment plan.
Discussing matters up front can help preserve relations between parties, as well as potentially helping you achieve an early resolution.
An alternative that can be used before or after you have issued court proceedings is to attempt Alternative Dispute Resolution (ADR).  ADR includes negotiation, mediation and other methods of resolving disputes without the need for court proceedings.

How much is my claim for, realistically?

This may seem obvious, but you need to have a real cause of action in order to bring a claim. If your claim gets to court the judge will look at the accuracy of your claim, including whether you are indeed owed the whole amount.
You will need to prove your claim to the judge. Do you have evidence to show that the full sum is owing?

What can the debtor afford?

Unfortunately even if you obtain a judgment, this does not mean you are guaranteed to recover the money. It will be extremely difficult to recover anything from your debtor unless he has a job, money in the bank, or real estate for example.
Be realistic about what your debtor will be able to afford. If he has no assets, you may need to reconsider issuing a money claim. That being said, there are a number of enforcement options available depending on the debtor’s circumstances.

How much does it cost to run a debt claim?

Litigation (court proceedings) should be used as a last resort, not least because there are costs involved.

Court fee

There will be a court fee for issuing proceedings. The level of the fee depends on the amount of debt that you are claiming. It can range from £25 to £10,000 for debts of £200,000 and over. You may be exempt from paying fees, depending on your level of income.

Recovery of legal costs

If you are successful, the Court is likely to order that the debtor pays your legal costs. This will include the Court fee and potentially other costs such as expert’s fees.
In claims under £10,000, the Court will usually order that the debtor pays you fixed costs. This is an amount set by the Court, dependant on the value of your claim. Fixed costs may not cover all of your legal costs, so it is important to bear this in mind before you issue.
For claims over £10,000, the Court will take a look at your legal fees and make a decision about how much you should recover. As a general rule, the Court will usually order that the debtor pays around 70% to 75% of your costs.
As with the main debt, having a costs order against the debtor is great, but not worth anything if the debtor has no money to pay it.
Our specialist debt recovery team can help you with your debt claim, whatever the size. Contact us today for a FREE initial consultation on 0800 9887756.

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