Collecting a debt after legal action taken and enforcement failed

In a case this month a new client came to us in a last ditched attempt to get their debt paid. They had already taken legal action themselves using Money Claim Online and had been successful in so far as they were awarded default judgment, but the debtor failed to pay and court enforcement officers failed to collect.

After investing many hours and money (court and bailiff costs) the client was at the point of giving up and accepting that they had thrown good money after bad. In a final attempt they searched for a debt collection agency working on No-Win, No-Fee and chose Sterling as we have proven expertise in their sector.

Sterling started work on the debt within 24 hours and following an investigation of the debtor’s business we were able to make contact with an employee at the appropriate level in the company to be able to resolve the matter. Our skilled debt recovery agent was able to explain the legal situation, and potential repercussions of non-payment. The debtor was inclined to apply to have the judgment set aside, but our agent was able to convince them that protracted legal proceedings would only result in the court finding in favour of our client, and further legal costs on both sides. Sterling was able to secure full payment of the judgment within two weeks of being instructed.

Sterling achieved the best result available to our client in the circumstances, however if the client had come to Sterling first rather than directly to court then they would have had a more profitable outcome far more quickly with less stress and frustration. In addition, when submitting the claim, the client had failed to add late payment compensation to the full extent permissible, meaning that the judgment amount (and hence the debt value we were legally able to collect) was less than it could have been.

 

Getting bad debts paid

We regularly hear from new clients who have chosen to take legal action either themselves or with a law firm and despite investing time and money they haven’t managed to be paid. Legal action can appear to be the obvious answer to getting paid, and often the client has become emotionally involved in the debt and sees litigation as a way of punishing the debtor. This approach, and certainly the desire for retribution, does not lead to the most profitable result. Litigation can drag on, be costly, time consuming and unpredictable.

Non-payment is almost always the result of one of these factors: disputes (whether legitimate or not), can’t pay, won’t pay, or errors in billing. Other than won’t pay’s and disputes, escalating a debt directly to legal proceedings does not address the root causes and therefore will not result in payment. Even with won’t pay’s or disputes, litigation is very seldom the most efficient way to resolve the matter. An experienced debt recovery agency will be able to identify the reason for non-payment and approach the debtor in a manner that is optimal for his case, heightening the chances for a successful recovery of their clients’ money.

 

Using a law firm

Instructing a law firm is often seen as the most obvious approach to getting a debt paid. Unfortunately it does have disadvantages. More often than not the immediate reaction from the debtor, when receiving a solicitor’s letter (even the simple £2 letters now common in the market), is to instruct their own solicitor to respond. The letters between the firms start to flow, seldom with any discussion by phone, usually the result is litigation, often with a defence lodged meaning that the hours add up further. The fixed fees quoted by law firms to submit a claim can seem cost effective, but they do not include responding to a defence which is usually at a high h