Pre-Action Protocol (October 2017)

Prior to commencement of court action against a sole trader or an individual we are obligated to send a letter before claim (LBC) under the Debt Recovery Pre-Action Protocol.

The LBC must give the debtor 30 days to respond to the claim and includes an information form, reply form and a detailed income and expenditure form for completion and return.

If after 30 days there has been no communication or payment we would then seek your instructions  for LRC to commence  court proceedings through the Claims Production Centre through which claims that fit the relevant criteria are issued electronically and guaranteed to be issued and served upon the debtor within 48 hours.   There is also an added benefit of reduced court fees.

THE PRE-ACTION PROTOCOL DOES NOT APPLY TO COMMERCIAL DEBTS

Legal Collections – Issuing your claim and enforcement methods

Once court proceedings have started, the legal process is the same for individual and commercial debts up to and including Judgment.  Enforcement choices vary depending on your debtor type and the value.

Upon receipt of the claim the court will issue a claim form and serve this and an accompanying response pack on the debtor who has  14 days to respond. The debtor can either do nothing, defend the claim or admit the debt.

If the claim is defended we can represent you throughout the process.

If the claim is ignored we can request the court to enter Judgment. Once Judgment is obtained it will be registered upon the Register of Judgments, Orders and Fines and as such it is a public record.   The credit reference agencies will check the Register and any Judgments obtained will be added to that person’s credit file where it will remain for 6 years unless it is paid within the first month.  The entry of a Judgment can affect someone’s ability to obtain credit.

If there is no payment offer or contact from a debtor once Judgment has been obtained there are a number of enforcement methods we can use to recover the money and LRC’s legal team will advise you which one is appropriate.

 

The most common types of enforcements we use are:

1. High Court Enforcement Agent (HCEA)/County Court Bailiff

The HCEA is formally instructed under a Writ  of Control for debts of £600 and above which allows the HCEA to attend at someone’s property (whether residential or commercial) for the purposes of recovering the debt in full.   If the HCEA is unable to obtain full payment it may seek to obtain a payment arrangement or, alternatively, seek to levy on goods to the value of the debt which could be uplifted and sold at public auction in order to satisfy the debt in full and all recoverable HCEA charges and additional interest.

LRC will instruct the County Court bailiff  for debts up to a value £600 where appropriate. Court bailiffs work in a similar manner to the HCEA in terms of attending at a debtor’s property for the purposes of obtaining full or part payment and/or attempting to levy on goods to the value of the debt.

2. Attachment of Earnings

This is where the court initially orders the debtor to produce proof of income in the form of 6-8 weeks of salary slips and also to complete a financial questionnaire and once received the court will make an order that the debtor repays the debt at a fixed sum per month.  If the debtor fails to respond to the court or breaks the payment arrangement ordered by the court, the court will then write to the debtor’s employer to provide information about the debtor.  The employer will then be ordered to deduct money directly from employee’s wages until such time as the debt, costs and interest are paid in full.  This is a very effective method if your debtor is in full time employment.  Should an employer choose to ignore the court then it could be liable for a fine or a short term of imprisonment.

3. Charging Order

If the debtor owns property either individually or jointly , an application can be made to the court for a  charge (similar to mortgage) to be obtained.  If a charging order is granted then this is registered at HM Land Registry to be added to the property so that in the event of a sale or remortgage you are  notified and ordinarily you would recover the amount claimed under the charging order together with continuing accruing interest.

4. Third Party Debt Orders

These cover the situation where the court may order that you are paid directly from an independent third party such as a bank, building society or trade debtor who holds or owes money for or to your debtor.

5. Debtor to attend court for questioning

This is an order for the debtor to attend court and be questioned under oath about their financial circumstances.  The order, once issued by the court, has to be personally served upon the debtor.  The debtor will be expected to attend court with any documentation that may be required such as proof of income, outgoings and assets.  You may attend the hearing to ask any questions you believe are appropriate.  This process is more of a fact finding process to assist in making an informed decision as to the most appropriate method of enforcement where other information about a debtor may not be available.

LRC can help you with insolvency actions including Statutory Demands, Bankruptcy Petitions and Winding Up Petitions as well as Possession Orders and Return of Goods claims.

If you have any questions about our service or would like to discuss your matters with us in greater detail, please contact the Business Development Team on 0330 024 6342