Unpaid Debts – How to Issue a Legal Claim Through the Court

When customers do not pay your invoices, it can be difficult to know how to proceed. If your pre-action correspondence has not resulted in payment, it is usually worth taking legal action to ensure your company is paid. Let’s take a look at how legal debt recovery works. 

What is the first stage of the legal debt collection process?

Before any legal action is taken, a Letter Before Action (LBA) should be sent to the debtor. This letter gives your customer a deadline in which to pay their debts. It costs very little to send an LBA and in our experience 86% of undisputed debts are paid at this stage.

Watch our video!

This 30 second video outlines the steps you will need to take when legally pursuing a debt.

How do you issue a money claim online?

If the LBA does not result in payment, it’s time to issue your formal legal claim. If the amount you’re claiming for is less than £100,000, as it is for most claims, you can do this by submitting a Money Claim Online (MCOL) or by instructing a specialist debt collection Solicitor to issue the claim for you.

If you issue through MCOL, you will need to provide details of the claimant (yourself or your business) and the defendant, as well as the particulars of claim. This includes how much money is owed to you and why. You may also choose whether you want to reserve the right to pursue interest on your claim.

Finally, you will be asked to pay a court fee by credit or debit card before the claim can be issued. Your claim will then be issued within two working days from the date that you submitted your claim.

Does your business suffer with late payers? See Lovetts’ Top 10 Tips for effective debt collection.

What happens after a money claim has been issued?

The defendant will then receive a claim pack within five calendar days. The fifth calendar day after your claim is issued is referred to as the ‘date of service’. Within 14 calendar days from the date of service, the defendant is expected to file a response, or up to 28 days if they file an Acknowledgement of Service (AOS).

The next steps depend upon how the defendant responds to your claim. The ideal scenario is that they decide to pay you directly or offer a full admission and repayment proposal.

However, the defendant also has the option to file a partial admission, a full defence, or even make a counterclaim against you. Once the defendant has made their response, the court will ask you whether you wish to proceed with the claim.

Alternatively, the defendant might not respond at all.

What is a CCJ?

A CCJ simply stands for County Court Judgment . You can request a Judgment after the claim has been issued and the deadline to make payment or respond to the claim has passed. The CCJ will then be recorded against the defendant’s credit record and you will have the ability to enforce the debt.

What is a default Judgment?

A default Judgment is simply another name for obtaining a County Court Judgment (CCJ). However, it is called a default Judgment because Judgment was obtained as a result of the defendant failing to respond to the claim.

What steps can be taken if a debtor does not pay the CCJ?

If your invoices are still not paid, you may need to apply to enforce your Judgment. There are various ways of enforcing your debt, and although statistically most cases will be paid before you reach this stage, it is always worth seeking advice or help before commencing enforcement action. A debt collection Solicitor or a High Court Enforcement Officer will be able to assist you.

This, in a nutshell, is the how the online legal money claims process works. Most claims are undisputed and therefore taking legal action should not be feared.

Related pages

How Do I Assess The Effectiveness Of My Third-Party Collection Agency or Lawyers?

Debt Reminder Letters – The Best Approach

6 Considerations You Should Make When Filing a Debt Claim

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28 November 2017