Debt recovery

Submitted by Chris Germaine on Wed, 03/14/2018 - 09:48
Debt recovery

There is a saying in the UK that “never a lender nor a borrower be” which means pretty much don’t lend anyone money nor borrow money from anyone. If this were to happen in practice, then there would have been no need for this article that advises about how to recover any money you are owed.  

If you are owed money, then what to do about it depends upon who owes you money and the amount of money owed. There is a broad spectrum of debt. At the thin end of the wedge are consumer debts. You purchase or order something and for whatever reason want your money back. At the other extreme are multi-million pound commercial contracts.

So, what do you do to recover your money or debt owed?

The starting point is always to evidence the debt. So, when you are making a substantial purchase or lending money to anyone, always best to have a written agreement. Get a lawyer to draft the agreement for you if needs be. This could be money well spent. When you buy something online you will have an order confirmation; when you buy something in a shop always get a receipt. As a basic rule of thumb, the higher the value of the transaction the more important it is to ensure proper evidence about what is agreed. If you don’t have anything in writing you may well face insurmountable difficulty in trying to enforce the debt through the Courts. As judges see it, if you have no paperwork to confirm money is owed, you cannot prove your case and recover the debt.

Once a dispute occurs you should always put your complaint in writing. Your correspondence and any reply received will act as good evidence there was an agreement and a debt owed, even if you do not have any contract.

If we are talking about consumer debts, there are consumer protection laws that provide a refund must be given if the goods or services are unsatisfactory. Most traders are very good and will provide a no quibble returns policy, but not all.  Fall into a dispute with a retailer, then you can get assistance free of charge from the local Council Trading Standards department. These departments are the governments enforcement agency to ensure that retailers and businesses comply with the consumer laws and can offer advice and in some cases will take up your dispute for you.

Other types of businesses may be regulated. It is always worthwhile checking if this is the case since if the business is a member of a trade association or profession, they may well be subject to a compulsory dispute resolution service. Using these schemes is also normally free of charge. They have the added benefit of not just enforcing the legal aspect of your contract but also what is “best practice.” Generally therefore they provide a more comprehensive option for recovery than just redress to the Courts alone. Additionally, most of these schemes are not binding upon the consumer which means that even if they do not find in your favour, you can still ask the Court to decide.

The other option is always to take your case to Court. If the debt owed is less than £10,000.00 this is called the “Small Claims” procedure. You cannot recover legal costs for cases of this value therefore most lawyers will be unwilling to act for you on a no-win, no-fee basis. The good news is that this procedure is designed to be straightforward and simple. Whilst Court staff cannot provide legal advice to you, they can help you fill in the paperwork and provide you with guidance notes about how to progress your case. Alternatively, Citizens Advice Bureaux also offer free advice and assistance in bringing such claims to Court.  Taking a case to Court does however entail payment of Court fees (recoverable if you win) unless you have a low income or are on benefits.

There are some unique situations where you cannot invoke the Court “Small Claims” procedure. Gambling contracts for example cannot be enforced through the Courts. Additionally, any wages owed are normally enforced through the Employment Tribunal, which does not involve payment of any Court fees.

Leaving aside the legality of your dispute and the amount of your debt, a practical point. Does the debtor actually have the money to repay you?   Another British saying for you “throwing good money after bad.” Most people are honest and genuine. Most companies rely upon their good reputation for repeat business. If you are not being paid back, could it be because the person who owes you money does not have it? Even if you go to Court and get a judgment, this is worthless if the person or company who owes you money can’t repay. You won’t get your money back and the investment you made in Court fees and possibly lawyers costs was simply spending more money for nothing.        

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