It is a fact of life that sometimes invoices do not get paid. This simply may be because of an oversight or because the debtor cannot afford to pay the amount or there may be a dispute and that is why the debt has not been discharged.
At GSC we have acted on both sides, both recovering debts for creditors and disputing debts or seeking time for debtors to pay .
This used to be a simple process but things have now changed by reason of a new Pre-action Protocol for Debt Claims that came into force on 1 October 2017 in respect of non-business to business debts. But the first point to remember is that if the debtor is a sole trader (i.e. an individual who is trading under a business name rather than in his own) he will fall within this Protocol.
In the case of the non-business to business debts a whole new procedure has been brought into play and one which shows yet again how the Court process is to be the course of last resort. The Protocol has in effect slowed down the whole process and the old-fashioned seven day letter no longer applies. Instead a formal Letter of Claim with an Information Sheet, a Reply Form and a Financial Statement Form are issued. The debtor then gets 30 days in which to respond and even that period can be extended if the debtor justifiably asks for further information or the production of documents. Even then the parties are further encouraged to try to agree a payment schedule and if they can’t, to use another form of alternative dispute resolution. Only then can proceedings be commenced. How this Protocol will impact and what the court’s attitude would be to non-compliance is yet to be made clear.
In the case of business to business debts the old procedures still apply and Court proceedings can be issued. At GSC we can advise on the whole gambit of options whether it be issuing High Court or County Court proceedings or if there is absolutely no defence by serving a Statutory Demand under the Insolvency legislation albeit the Courts have said on many occasions that they will not permit Insolvency Proceedings to be used as a means of debt collecting. There are however occasions where there is absolutely no defence to the claim and the service of the Statutory Demand can lead to either prompt payment or dialogue and an agreed payment schedule.
However, it must be borne in mind that if a Statutory Demand is served on an individual, an application can be made to set it aside. If the Court does then set it aside, the creditor can be at real risk of having to pay a lot of legal costs. In the case of a company debtor there is no such equivalent procedure. However a company debtor will have to seek injunctive relief to restrain the advertising of the Statutory Demand or the presentation of the petition. Again, there can be major cost ramifications.
If the Court proceedings are used, the debtor can make offers which the Court requires the claimant creditor to consider. Once judgement is obtained then there are several methods to enforce judgement including again insolvency proceedings but also instructing the Sheriff or Bailiff, attaching a third party debt such as a bank account or applying for a charging order against the debtor’s property.
In summary therefore GSC can advise on:
• The Pre-action Protocol for debt recovery for non-business debt
• Pursuing Court proceedings
• Issuing Statutory Demands
• Defending claims for an unpaid debt
• Defending Statutory Demands
• Using mediation or other form of ADR to resolve a debt dispute
• Dealing with the enforcement of a Court Judgment
For information on our charges fees please visit: Debt recovery fees – November 2018.
Michael’s excellent legal knowledge, guidance and professionalism enabled a successful defence. He is a straight talker, getting to the heart of the issues quickly. Tactically astute with excellent negotiation skills. I would highly recommend Michael in any Commercial litigation.
Michael Shapiro is concise in his advice and adopts a pragmatic approach to challenges delivering realistic and enterprising solutions which produce results.
Michael is our first call whenever we need any legal advice. Straight talking, commercial astute, knowledgeable and honest, he has consistently produced results that result in better outcomes for my business. I am pleased to call him our lawyer and partner.
I have known Michael for 15 years, he is dynamic in his approach to the various problems we have put his way. He gets to the heart of the problem quickly and provides a very workable solution. His litigation skills are excellent and forceful with the other party. I very much like him on my side.
Michael Shapiro is an experienced litigator who has a very calm and collected approach to his job. He is never phased by the other side, and has an excellent manner with even the most difficult clients.
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