How to Recover Debt - A Guide
Recovering debt can be frustrating. Chasing invoices that have gone unpaid for months is time-consuming, and without a proper process, it can be fruitless. Carrying outstanding debt in your business can also affect cash flow and can even threaten the longevity of your business. We can help with both the recovery of unpaid invoices and the enforcement of judgments.
Step 1 - Identifying debt that can be recovered
Complete Clarity Solicitors are debt recovery experts. We understand the need to pursue unpaid debts efficiently and effectively. We are also commercially minded and will be upfront with you about the chances of recovery. This is the first step in our process. We work with businesses of all sizes, and our team has excellent experience of debt recovery and invoice recovery. This allows us to understand the extent of your debt recovery problem entirely and build a strategic plan for getting the maximum amount owed to you in a cost-effective way.
Step 2 - Pre-litigation
In most cases, the first action we will take is to issue the debtor with a letter demanding payment. The letter will advise the debtor that unless payment is received within a specified amount of time, further legal action will be taken to recover the debt. This is sometimes enough to prompt the debtor into making the payment, and the majority of debtors will settle at least some of their outstanding invoices. If the debtor fails to make a payment, you may then need to consider taking court action to recover the debt. Generally, court action to recover debt will be brought in the Sheriff Court. However, where the debt is of particularly high value, or the circumstances are particularly complex, action may be brought in one of the higher courts.
Our debt recovery team have exceptional experience in raising all types of recovery actions in the Sheriff Courts and can provide high-quality, practical advice in every circumstance.
Step 3 - Raising an action for debt recovery
Debts of less than £5,000
If the debt owed is less than £5,000, then the ‘simple procedure’ can be used. To raise an action, we will complete a claim form on your behalf. The claim form must set out:
- The full details of the parties that are in debt to you, including their names and addresses
- Details of why your claim should succeed
- Any steps you have taken to recover the debt
- Details of witnesses
- Copies of the outstanding invoices
- Other materials which may support your claim
The claim form and documents must then be sent to the appropriate Sheriff Court. The sheriff clerk will register and check your claim form, and if everything is in the order, they will issue a timetable. The respondent must then complete the response form and send it to you as the creditor and the Court, no later than the last date for a response as set out in the timetable.
When submitting a response, the alleged debtor has three options:
- To admit to the claim and make payment
- To admit the claim and ask for time to pay
- To dispute the claim or any part of it
If they wish for time to pay, the debtor must complete a Form 03, and send it to the Court. You may accept or refuse the offer of repayment with time to pay. If you decide to accept the offer, an Instalment Decree or judgement will be granted. On the other hand, if you choose to reject the offer, a hearing will be fixed by the Court. We can advise you fully as to whether you should accept an offer.
If the debtor does not respond, you will have two weeks to send an application to the Court for a decision. If the debtor disputes the decision made by the Sheriff, the Sheriff has several options:
- To refer the dispute to alternative dispute resolution (ADR)
- Arranging a case management discussion
- To arrange a hearing
Debts of more than £5,000
If the debt owed is for more than £5000, the Ordinary Cause procedure is used. To raise an action, we will send a writ to the Sheriff Court outlining the details of your claim. The writ will be registered and will be authorised to be served on the debtor. This process takes typically 5-7 days. The debtor has 21 days to decide whether to pay or to defend the action after the warrant has been served. If the debtor is an individual, they may also ask for time to pay.
To ask for time to pay, the debtor must complete Form 03, and send it to the Court. It is then up to you to decide whether to accept or refuse the offer of repayment with time to pay. If you accept the offer, an Instalment Decree or judgement will be granted. If you decide to reject the offer, a hearing is fixed by the Court.
If the debtor does not make a time to pay application, and the action is not defended, you may minute for decree or ask for judgement. After you have received an extract decree, we can serve a formal written demand for payment.
If the action is defended, the Court will issue a timetable including a date for defences to be lodged, the time by which any changes must be made to the written case, and the date of the Options Hearing. After the options hearing, a proof may be fixed.
Step 4 - Enforcement
Where you have been successful in court proceedings, we can assist with enforcement. The Sheriff Officers will serve a formal charge for payment for the amount due. If the debtor does not make a payment, or arrangements to pay within fourteen days, it is possible to take further enforcement action.
Such action may include sequestration (bankruptcy) proceedings. Sequestration does not guarantee all of the amounts due to you will be recovered. The debtor may have many creditors. However, we can discuss whether this may be the best course of action to recover the maximum amount owed to you.
Contact our debt recovery experts in Glasgow, Edinburgh, Inverness & Aberdeen, Scotland
Based in Glasgow, Shawlands, East Kilbride and Edinburgh, we provide our clear and practical legal services to people across Scotland including those from Airdrie, Motherwell, Bellshill, Dumbarton, Paisley, Ayr, Fife, Crossmyloof, Giffnock, Clarkston, Newton Mearns and many other surrounding areas. Call us today on 0808 168 5822 or complete our online enquiry form and let us help you.
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