In an ideal world, all your customers would be a delight to deal with and you would receive your payments on time, without having to chase anyone up.
Unfortunately in reality, once people have received your product or had the benefit of a service you provide, they can be rather tardy about making payment.
In some cases this can be a genuine oversight whilst others may have run into financial difficulty. But ultimately if the debt is not settled and no repayment plan has been agreed, you could end up in court if you want to get your money back. Here’s an overview of what you can expect if this is your only option.
How should I prepare my case for court?
If you have been unable to reach a compromise or repayment agreement, court could be the only avenue left for you to explore.
If this is the case, your solicitor and the court will want to see documentary proof of what has happened. Make sure you have copies of letters and emails you have sent requesting payment, and also anywhere you have offered a compromise arrangement, such as paying by instalments. A court is liable to look more favourably on some-one who has clearly tried to reach a solution before taking legal action.
If the case is going through the small claims court, you will not need a solicitor to pursue the matter. However, you may still want to get legal advice, particularly if you are unsure about any aspect.
If the settlement is larger, getting a solicitor is usually advisable. They will be able to provide you with advice and guidance and help prevent you from wasting a large amount of money on a case which is unlikely to win.
How do I prove the debt exists?
In the perfect scenario you would have a contract which sets out the terms of the payment and what will be supplied in return. But failing this, any kind of documentary evidence is helpful.
Anything which shows you held up your side of the bargain is a good start; this might include a signed delivery note for example. Evidence that the customer specifically requested the goods or service will strengthen your case, such as a completed purchase order.
But even if you don’t have any documentation to prove your case, all may not be lost. In some circumstances it is possible for the courts to ascertain the existence of the debt through other means, such as the conduct and communication regarding payment or the actions of the customer itself. If in doubt, talk through the case with your solicitor before pressing ahead.
Will I definitely get my money if I go to court?
Even if the debt is legitimate and the court agrees that the customer should pay up, you could still face a long and hard battle to get your cash.
The court may rule in your favour and order the debt to be settled but if the customer is still unwilling or unable to pay, you will have to return to court to get an enforcement order. This attracts a further cost but can be added to the money owed to you by the other party.
But even if you get an enforcement order, if the individual is having financial problems and has no saleable assets, you may not get paid. If insolvency is declared, the best you can hope for is to get a small proportion of what you were owed but there is a chance that you may get close to nothing at all.
For this reason, it is always worth carefully considering the customer’s finances before deciding to pursue the case. A good solicitor will be able to help point you in the right direction and let you know what the likely chances are of recouping your money.
What are the options for enforcement?
The good news is that if you have to resort to an enforcement order, there are many different possible ways to reclaim your money.
Broadly speaking, they can be split into four options:
- Warrant of Execution. This is appropriate when there are assets or goods of monetary value held by the debtor. Bailiffs will attend the property and seize possessions for resale in order to raise the necessary funds for payment.
- Third Party Debt Order. This can be used either on a bank account that the individual has money in, or to a third party who owes the defendant money. In the case of a bank or building society, they must set aside the sum of money you have been awarded from the individual’s bank account and prepare to pay you directly. The defendant will be offered a hearing first before payment is made. Alternatively, the court can instruct a third party who owes the debtor money to pay you directly.
- Attachment of Earnings Order. This is applicable only for employed people and means that their employer is ordered to deduct money directly from their wages each month in order to settle the debt.
- Charging Order. If all else fails, an asset held by the defendant will be flagged with a marker which means if they try to sell it, your debt will be paid first from the proceeds. This would typically be used on either property or stocks and shares.
If you have never taken a debt to court before, you not be certain about what to expect. However, an experienced solicitor will be able to guide you through the process from beginning to end, as well as provide advice about the most efficient way to deal with the problem. And if handled sensitively and correctly, you may even be able to keep an amicable professional relationship with the customer who owes you money, it’s not unheard of!
An article by Samantha Wood, a specialist legal writer, who recommends http://www.tollers.co.uk if you need legal advice on collection of a commercial debt.
Image credits: casey serin and AFGE