Do I need a solicitor to help me collect a debt?

Do I need a solicitor to help me collect a debt?

Although a solicitor can assist you in collecting a debt, there are a number of steps you can take on your own, before getting a solicitor involved.

Under legislation relating to late payments, once a debt becomes overdue, you can recover interest and — if you need to take action to collect the debt — an amount in respect of your debt collection costs. In discussing the matter with the debtor, or in corresponding with him, it may be useful to remind him of this.

If a debtor fails to pay despite your efforts to persuade him to do so, there are various other options open to you.

You could turn the matter over to a debt collection agency, which will, for a fee, collect the debt on your behalf. That can be an effective means of collecting a debt, but there can also be some drawbacks. You may find that the agency’s fees are such that you will get less than 100% of the amount the debtor owes you. In addition, agencies can be aggressive, so you may lose the goodwill of the debtor (which may or may not be important to you).

If you decide to use a debt collection agency, you may wish to confirm that the agency is registered with the Credit Services Association, which you can do on the Association’s website.

Another alternative is to try to persuade the debtor to engage in some form of mediation or other alternative dispute resolution procedure, although a debtor’s agreement to such a process might amount to no more than a stalling tactic.

If the debt is not disputed, you can serve a statutory demand on the debtor. If the debt is more than 750 and the debtor fails to settle the debt or agree an arrangement for payment within 21 days of the date you serve the statutory demand, then you are entitled to petition the court for the debtor’s bankruptcy (if he is an individual, sole trader or trading in a partnership) or winding up (if the debtor is a limited company).

A statutory demand can be a powerful lever, but you need to bear in mind that the debt must not be disputed — if it is, then the debtor can ask the court to set aside the statutory demand. You also need to comply with certain formalities regarding the content of the demand and service of the demand on the debtor. If you are not entirely sure of yourself in using a statutory demand, then it is probably sensible to get advice from a solicitor.

If you decide that you have no alternative but to make a claim in court, then you should consider carefully whether you need some professional assistance. Although there is a small claims track in the county courts (for claims of up to 5,000), there will be some costs involved in initiating proceedings.

You should make certain that the size of the debt justifies the cost of bringing proceedings and that you understand the risks involved in court action. In particular, you should be aware that you could be liable for the other party’s costs if the other party successfully defends your claim. In addition, you should be confident that the other party has the means to satisfy a judgment — if not, you will have spent money to get a court judgment that you may then be unable to collect.

For claims in excess of 5,000, you can bring proceedings on the fast track of the county courts or, for a claim of more than 25,000, in the High Court. For such larger claims, you will almost certainly need to instruct a solicitor and a barrister.

There are thousands of solicitors in the UK who can assist you with debt collection matters. You can take some time and try to find an appropriate solicitor by doing your own research, or you can search our solicitor directory by using the form on the right-hand side of this page.

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