Issuing a Court Claim Against Your Debtor
Dealing with unpaid invoices can be a frustrating experience for any business owner. You have provided goods or services, but your hard work has not translated into cash flow. When reminders and negotiations do not generate results, it might be time to consider more serious measures, such as issuing a Court claim against your debtor. Knowing your options is crucial for maintaining healthy finances.
When to Consider Issuing a Court Claim
If the debtor is refusing to engage with you despite multiple attempts to elicit a response, then it may be time to issue proceedings. Before issuing proceedings you should ask: is the debtor unable to pay or unwilling to pay? If they are unwilling to pay, but are refusing to engage County Court proceedings may be a good solution.
However, if your debtor is unable to pay, you may wish to consider insolvency action where appropriate.
The Steps to Filing a Court Claim
When it comes to filing a County Court claim preparation is key. You will need to gather all of the necessary documents that relate to your unpaid invoice. This includes: contracts, terms of business, invoices, payment reminders and correspondence with your debtor.
Money claims in the County Court are dealt with exclusively by the Civil National Business Centre. Claims under £100,000 can be issued online via Money Claims Online. Claims over £100,000 must be sent to the Court for issue by post.
You must complete the claim form and provide particulars of your claim when you issue proceedings. The particulars of claim must set out the legal basis of the claim and explain why you say the money is due. Provision should also be included for any interest, compensation or costs. It is important to ensure that this information is correct.
A Court fee is required to issue your claim. The amount of the fee will depend on the value of the claim and is set by the Court. Court fees are updated periodically, search for the Court document EX50, for the most up to date fees.
After the claim has been submitted to the Court, the Court will issue proceedings and arrange to serve these upon the debtor. The debtor will then have 14 days from the date of service to file a response to the claim. If no response is filed by the debtor within this time you will be able to apply for judgment in default.
Alternative Options for Debt Recovery
When facing unpaid invoices, you might not always need to resort to a Court claim. Exploring alternative options can save time and money.
Mediation is one effective approach. This involves a neutral third party helping both sides reach an agreement without escalating the matter legally. It’s often quicker and more cost effective option than Court proceedings and indeed may be preferable, particularly where you are trying to preserve the relationship with your customer.
It is worth noting that for disputed claims under £10,000, the Court provide a free mediation service to help try to resolve disputes.
Negotiation directly with your debtor can also yield positive results. Open communication may reveal reasons for non-payment, allowing for payment plans or extended deadlines.
The Role of a Debt Recovery Solicitors in Issuing a Court Claim
Debt recovery solicitors play a crucial role when it comes to issuing a court claim and handling the litigation process. Solicitors can streamline the often complex process of litigation and provide you with invaluable advice, experience and support throughout your case.
If you are not sure how best to proceed solicitors will be able to offer advice and guidance from the outset to help you decide how best to proceed and support you in making the right commercial decisions for your business.
Conclusion
It is important that before embarking on legal proceedings that you know how the procedure works and how to properly prepare and present your case to maximise your chance of success.
It is worth exploring alternative dispute resolution options, before issuing proceedings as you may find this is a quicker, more cost effective option that allows you to preserve any ongoing relationship with your customer.
If you are facing challenges with unpaid invoices or struggling with debt recovery issues, Lovetts are here to help. Lovetts solicitors specialise in UK & International debt recovery with 30 years of industry experience.
If your business needs help recovering outstanding debts, contact us today.