At oracle law, we deal with a huge number of debt recovery enquires.
No matter if it is £100 or £100,000, recovering what you are owed from customers who are failing to pay or meet their payment schedule obligations can be a complete nightmare.
What is debt recovery?
There are a number of different reasons why debt recovery service may be required.
The main ones include:
- The debtor cannot afford to pay their debt, whether for services performed or a product bought.
- The debtor owes money to friends or family
- Since agreeing to a payment schedule, the debtors circumstances have changed, they are now unable to meet payments, and renegotiation is impossible.
- The customer is refusing to pay as they are unhappy with the quality of the services or products provided
The vast majority of debt recovery cases occur as a result of the debtor being unable to meet payments due to their financial situation.
However, there are still a surprising number of cases where a customer simply refuses to pay for products and services, and this is a serious problem for small businesses who will often budget and make investments based on projected future income.
If you have customers paying monthly for a service and suddenly refuse to pay that is a major blow to your plans and a failure to recoup debts is the final nail in the coffin for many companies.
Is it worth using a solicitor?
Whether or not it is worth using a solicitor when looking to recover a debt varies from case to case.
The one thing that remains constant, however, is that you should always get some form of legal advice when pursuing a debt recovery claim.
If you are only claiming for £10,000 or less, the chances are that you can probably process this yourself, as the claim can easily be made online through the Small Claims Court.
There will be a relatively small fee to pay for this application process and cases are normally resolved within 6 weeks to 6 months.
The fee for a small claims application varies depending on the claim you are making but, in general, successful Small Claims Court cases pursued without a solicitor will see you recoup around 90% of the money you are owed once the judgement is enforced.
On the other hand, a solicitor can often charge as much as £1000 to run the claim on your behalf meaning that the amount you will end up making back will be far lower, unless the claim is for the maximum amount.
The general rule is that it is most cost-effective to pursue small claims without the services of a solicitor, but once the claim exceeds £10,000 more formal legal representation should be sought, due to the more formal nature of the procedure.
What can a debt recovery lawyer do?
Debt recovery claims exceeding £10,000 become increasingly complex and having legal representation can be vital to a successful outcome.
It can often take as long as 2 years for a Crown Court hearing date to be set and often, debt recovery cases are resolved out of court so having a skilled negotiator on your team is a huge asset.
Furthermore, if you are claiming for a very large debt, a solicitor will be able to help you calculate the interest owed, which can then be included in the claim and you could end up receiving an even larger settlement if the debt has been outstanding for a prolonged period.
What are the risks?
No legal claim is free from risk, no matter how clear cut you think the case may be.
The biggest risk associated with debt recovery, by far, is the threat of a counter claim.
If your case is built on insubstantial evidence, the chances of a counter claim being filled by the other side is high, and if their legal representation is strong, you could easily end up being the one who owes money.
Using a solicitor with an in-depth knowledge of debt recovery will give you the best chance of success as they will advise you as to whether there is a genuine risk of a counter claim or that your evidence is strong enough to pursue the case with confidence.
Counter claims do not always result in the original claimant owing money, and could instead simply mean that the debt owed is wiped out.
If you have any questions about debt recovery and would like to speak to one of our expert solicitors regarding any of the issues that have been discussed above, get in touch with Oracle Law Clarkston today on 0141 404 1091.