The Legal Process to Debt Recovery
Depending on the individual circumstances of the case, a solicitor may use the following legal steps to recover unpaid bills from a debtor. It’s important that the debt recovery process follows Pre-Action Protocol, starting with a Letter Before Action.
Letter Before Action (LBA) – Initially, a solicitor will send a final reminder letter to the debtor called a Letter Before Action (LBA), serving as a final warning to the debtor of the outstanding debt and the consequences if payment is not made. This letter needs to include details of the debt, payment instructions and provide a reasonable deadline by which the debt needs to be paid. You can also offer a ‘payment plan’ if suitable for the circumstances. The purpose of this letter is to avoid legal action.
Legal action – If the debtor is still not responding to the LBA, or any settlement discussions are ultimately unsuccessful, then it may be that legal action is the only way forward to receiving a response or recovering the money. Issuing a County Court Claim form is the first step. The court then sends back a ‘Response Pack’ for ways in which the debtor can reply. It’s important to ensure there are no errors in these forms at this stage.
Particulars of Claim – The creditor also needs to include the basis of the claim (the Particulars of Claim), which specifies the debt owned, the reason for the unpaid amount, and any interest on the amount being claimed. It’s again important to ensure the Particulars of Claim is clear and contain the correct amount of detail otherwise it could be returned by the court, delaying matters.
Alternative Dispute Resolution (ADR) – If the debtor or creditor fail to agree on the existence, the amount, the enforceability, or any other aspect of the debt, then these parties should go down the route of Alternative Dispute Resolution (ADR) rather than resorting to going straight to court. These include mediation, whereby parties aim to negotiate a settlement with the guidance of a qualified civil mediator, and arbitration, where all parties put forward their cases to a qualified arbitrator who weighs up the evidence and makes a decision on the outcome of the dispute.
