Collecting Debts Owed to You

When it comes to being owed money, you are the creditor and the person that owes you is the debtor. If you are owed money there are various legal routes to recovering your debt. Depending on the size of the debt and the nature of the contract proving that money is owed, your options as a creditor will vary.

Relevant information in reclaiming debt

To collect a debt owed to you, it is very important to have information clearly laid out. This should include: who is involved in the debt including full names and addresses as well as signed and dated copies of any loan agreement. The creditor also needs details of the repayment plan and any correspondence with the debtor.

Trying to reclaim money

Being owed money is extremely frustrating, however it is very important to keep your cool and stay within the law. For instance, the creditor should clearly set out the process they will take in order to reclaim their money, staying within the law at all times and sending any correspondence via recorded delivery, and keeping copies.

What to avoid in collecting debt

Arguing over the debt is futile, as is protracted correspondence that could simply be a waste of time. Do not issue any threats or harassment, because the debtor may be able to use this against your or even press charges. If you threaten legal action, make sure that you are prepared and able to do so.

Using the law to collect a debt

If a debtor ignores you or refuses to pay off debt, you may wish to progress the case by discussing it with your solicitor. A solicitor will be able to write a letter to the debtor threatening legal action should payment not be forthcoming, and this can provoke a quick response.

Further action used to collect debt

Using a solicitor will allow you to establish your options in collecting a debt. Some companies specialise in debt recovery, but it is worth assessing the cost.

What to do if the debtor still refuses to pay

If the debtor continues to refuse to pay their debt to you, or if there is a dispute from them, you could consider taking your debtor to court. Progressing to a court order can prove to take a long time and be very expensive. There are usually alternatives to court action, which can include arbitration, ombudsman services or mediation. Using any of these processes is termed as alternative dispute resolution.

Using the court to recover debt

Once you have run out of alternatives and there seems no way of collecting the debt without court action, it is important to take independent legal advice. It is worth remembering that if the court action fails, the creditor may have to pay legal fees for the debtor. The facts of the case need to be clearly established, or the court may throw the case out. Debts of under £5,000 will be settled at the small claims court, whilst sums over this amount will be heard in the County Court. Claims over £15,000 will be heard in the High Court. Once your claim has been made or an agreement struck, you can ask the court to enforce the ruling if no money is received.