Personal Debt Collection
Do you need to recover a personal debt?
Making a claim
If you are the Claimant, you have to cross two hurdles: first, win your case by obtaining a County Court Judgement (CCJ) and second, get the money! Sometimes the first part is easy but the second part is more difficult. Sometimes it is the other way round. The CCJ does not itself guarantee your payment. You need to know that the debtor has the means to pay before you start. There is rarely any point in suing someone who has no income or property and who receives state benefits; you could be throwing “good money after bad”. Most claims for debt recovery are for sums of less than £5,000.
This means they are treated as a small claim and even if you win, your opponent (the Defendant) will not be ordered to pay legal costs you incur except the Court’s issue fee and a small fixed amount proportionate to the size of the debt. For very small debts e.g. under £300, it is usually uneconomical to employ solicitors but we can still advise you how to run the case yourself.
If you are claiming a sum of over £10,000 then you can claim a part of your legal costs from your opponent but you will not recover all of them (although there are exceptions to this rule). You may have to pay additional legal costs to us from what you win depending on what happens and whether the case goes to trial. You may get help paying legal costs e.g. if you have legal expenses insurance attached to any other policy of insurance you have taken out.
Defending a claim
If you are the Defendant and are served with debt claim proceedings, you must respond within a fixed period. If you do not do so, the Claimant can obtain a Judgment by default. Having a CCJ against your name is severely damaging to your credit rating and may make it very difficult for you to obtain a mortgage. It is vital that you take legal advice at once so that the response forms can be completed and returned to the Court in time. In some cases, you may feel that you have a counterclaim i.e. that the Claimant owes you money or is in breach of some other obligation owed to you. If so, you need to present your counterclaim with your response. From this point onward the paperwork required to satisfy the Court becomes more and more complicated and you would be unwise to dabble in the process if you do not know what you are doing. You should pass the papers to someone who does.
Once you have obtained the CCJ you need to enforce it by one of the usual processes: a warrant of execution, or attachment of earnings order, or charging order against property, or a third party debt order against the Defendant’s bank are the most common methods. There are advantages and disadvantages in each method and you need professional help to decide which is best. Space does not enable us to say more about enforcement options but some work better than others depending on the circumstances.
These notes are no more than a thumbnail sketch of a process that can become extremely complicated and worrying and where there are numerous possibilities of making terrible mistakes by not understanding what is required. We would urge anyone facing any contested debt action to pass it to a solicitor.
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