In the UK, the debt recovery process typically involves several stages:
Initial Contact: The first step is often sending a letter or making a phone call to the debtor to remind them of the outstanding debt. This letter should include details of the debt, the amount owed, and a deadline for payment.
Negotiation: If the debtor responds, you can negotiate repayment terms. This may involve setting up a repayment plan or agreeing to a lump sum payment. Be sure to document any agreements in writing. You should ensure Legal advice is taken before agreeing or setting any terms in terms of repayment.
Letter Before Action (sometimes also referred to as a Letter of Claim): If the debtor doesn't respond or refuses to pay, you can send an official Letter Before Action. This formal letter gives the debtor a final opportunity to pay before legal action is taken. It should outline the consequences of non-payment.
Legal Action: If the debtor still doesn't pay after receiving the LBA, you can take legal action. This may involve filing a claim in the county court. The court will issue a County Court Judgment (CCJ) if the debtor doesn't respond or disputes the claim.
Enforcement: If you obtain a CCJ, you can use various enforcement methods to recover the debt, such as seizing assets, wage garnishment, or using bailiffs.
Insolvency Proceedings: If the debtor is a business, you may consider insolvency proceedings like winding up or bankruptcy if they cannot pay their debts.
Monitoring and Follow-Up: After obtaining a judgment, you can monitor the debtor's financial situation and continue efforts to collect the debt.
It's important to note that the debt recovery process can be complex, and it's advisable to seek legal advice or consult with a debt recovery agency to ensure you follow the appropriate legal procedures. Additionally, the rules and regulations surrounding debt recovery may change over time, so it's essential to stay up-to-date with the latest laws and guidelines.
If you are unable to pay for legal advice, the government website has some useful information at https://www.gov.uk/browse/tax/court-claims-debt-bankruptcy
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