Are you owed a significant amount of money? Reports show that 9 million people in the UK are in serious debt and the average UK household debt is now at a record of £13,000! So with this increase, how do you recover what is owed to you? We look at the steps you need to take to sue for an unpaid debt.
What will happen?
The court encourages parties to attempt to negotiate and resolve the matter without the need to start court proceedings. This can save debtors and creditors both money and time.
In October 2017, the Ministry of Justice will be introducing a specific procedure for unpaid debt matters. The Pre-Action Protocol for Debt Claims will encourage the parties to agree a reasonable repayment plan. If you cannot agree a payment plan with your debtor, the parties will be encouraged to consider using an Alternative Dispute Resolution (ADR) procedure.
On average over 3,000 consumer County Court Judgments (CCJs) are issued each day. From October, therefore, the court will expect the parties to have complied with the Protocol. The court will take into account non-compliance and may order sanctions on that party. This could include paying the other party’s costs.
What if I cannot settle my debt claim?
We often find that debtors would rather try to settle the debt without you having to issue court proceedings. However, in some cases this is just not possible. At this stage, you may wish to issue the proceedings to sue your debtor.
If the debtor does not defend the claim or pay the debt within the given period of time, you may be able to ask the Court to order a default judgment. Default judgment is a binding judgment in one party’s favour, as a result of the other party’s failure to take a specific action. In this case, it is the Court ordering that the debtor pays you the money as he has failed to defend the claim in time.
On the other hand, if the debtor does defend the claim, the claim will go to a hearing at court.
There is nothing to stop the parties continuing to negotiate a settlement in the meantime.
What should I do?
- Speak to a solicitor, and make sure the unpaid debt claim is worth pursuing.
- Collect evidence to show that you are owed money by the debtor.
- Seek as much information about the debtor as you can in terms of whether they can’t or won’t pay.
- Are you within the 6-year time limit from the date the debt became due to take action?