If a the company that owes you money fails to respond to all efforts to contact them, continually makes excuses to avoid paying or disputes the debt, then your final recourse is to take court action against them, often known as taking the company to 'small claims court'.
My Credit Controllers can take a debt right through the claims courts for you if it proves to be necessary. This fact can help recover the debt before it ever gets that far. The credible threat of ending up in court is often enough to bring the most stubborn of hold-out debtors to the negotiating table.
Going to court is a real pain for the debtor. There's paperwork to fill out. Losing and having a County Court Judgement or CCJ against them will have a severe impact on their credit rating and this will affect their ability to borrow from the bank or take credit from suppliers. It really is in their interest to settle the debt or agree a payment plan before we get the courts involved.
However, for the small number of cases that do end up in court this article outlines how it works.
The process is not without risk for the creditor. There's a court fee to pay upfront. If you don't win the case you may not get your fee back. If the business denies owing the money, you may have to spend time to attend a hearing.
The fee depends on the size of the claim amount, so the debt plus late payment interest and any reasonable costs you wish to add. You can see the current rates below.
|Claim Amount||Court Fee|
|up to £300||£25|
|£300 - £500||£35|
|£500 - £1,000||£60|
|£1,000 - £1,500||£70|
|£1,500 - £3,000||£105|
|£3,000 - £5,000||£185|
|£5,000 - £10,000||£410|
|£10,000 - £100,000||4.5%|
|£100,000 - £200,000||5.0%|
The court can order your debtor to pay if they admit to owing the money or donít respond to the papers.
Most of the time, the issue is settled based on the submission of written materials, without the need for a hearing.
To place a claim with the court you need to submit a form and pay the fees. Using the online court service saves money and streamlines the process.
You can add late payment interest and fees to the total.
The person or business who owes you money must respond to your claim within 14 days of receiving it. If you get paid or the debtor makes the offer of a payment schedule that you're happy with you can withdraw the claim at any time.
If you don't get a response you can ask the court to order them to pay.
A court hearing will be necessary if:
the debtor disagrees with the amount or says they donít owe you any money
you canít agree with the debtor on a payment schedule
There are additional fees at this stage and a further questionnaire to complete.
We can still talk to the other business to try to reach an agreement before the court hearing. If the claim is worth under £10,000 we can use the courtís small claims mediation service. This is often worth trying because if the judge thinks you've made no effort to agree out of court they might not award costs. If we manage to reach a settlement before the hearing you might get some of the court fees refunded.
If the claim is a small claim (under £10,000), it may be processed without a hearing and only using written evidence.
If there is a hearing you can either represent yourself, or use a solicitor or advisor.
The court will send you a letter with its decision after the hearing. If you disagree with the decision, you have 21 days from the date of the decision to appeal.
If they still wonít pay, youíll need to ask the court to take extra steps to collect the money, called enforcing a judgment. There are further court fees at this stage - ordering someone to attend court costs £50, and the other steps cost £100 each.
You can ask for an officer from the company to attend court, to give details of its accounts.
You can then decide on what you need to do to get your money.
1. Send bailiffs to collect payment
You can ask the court to use bailiffs to collect the money. The bailiff will ask for payment within 7 days. If the debt isnít paid, the bailiff will visit the business to see if anything could be sold to pay the debt.
2. Freeze assets or money in an account
The court can freeze money in the debtor's bank or building society accounts. The court will decide if money from the account can be used to pay the debt.
3. Charge the companyís land or property
You can ask the court to charge companyís land or property. If the land or property is sold, they must pay you before they get their money.
Pursuing your overdue business debts through the courts is costly and time-consuming. The whole process can take a long time before you get your money and involves you spending money up front. My Credit Controllers can help you avoid ever reaching this point. We offer full or partial debtor book management as an outsourced service.
If you have a customer that won't pay, why not try our CreditXS service for collecting individual overdue commercial debts. There's nothing to pay if we can't collect, and if you choose to, we can add our fees to the debt, so our service costs you nothing.
Because we can help you take the process all the way through to enforcing a court judgement if necessary, this provides your hold-out debtors with a strong incentive to borrow their money from other suppliers and settle their debts with you quickly. In the small number of cases that require court action, My Credit Controllers will charge for hours spent and court filing costs.