Chasing Old Debts – What Are The Options?
Chasing Old Debts – What Are The Options?
Most people find themselves in the position of being owed money at some point in their lives.
It may have resulted from loaning money to a friend or family member, who later did not pay you back.
If you are self-employed or the owner of a small business, it could be that a customer has not paid you for goods or services.
In any case, the fact remains that you need to collect the debt.
Whilst we advise that you attempt recovery of debt right away, many people hold off on doing so.
There are a variety of reasons for this.
For instance, it might be that the person who owes you money has convinced you that repayment is not an option at the moment.
They may simply be unreachable, with all attempts at reaching them failing.
It could be that the creditor is hesitant to confront the debtor about the owed money.
This might be true if it could jeopardise a relationship.
Small business owners or freelancers may not want to risk provoking a customer.
This is out of fear of losing future opportunities if the collection goes wrong.
For those in this position, it can often be upsetting and frustrating.
This is understandable, as you want your money back as soon as possible.
For a business, this is even more important, as that money may be required to keep operations running smoothly.
As the debt grows older, the urgency to collect it generally trails off, and bigger priorities come into prominence.
Whilst the reasons are understandable, you should never abandon a debt should or leave it idle.
If it is, then it is important to know what your options for collecting it are.
Frontline Collections are the UK’s leaders in private and personal debt collection matters.
Our team of debt collection experts have provided some free advice on chasing old debts for both business and private individuals.
Chasing Old Debts – How Long Do I Have to Chase Owed Money?
Before chasing old debts that have been left idle for any period of time, the first thing to do is to identify the age of the debt.
In the UK, there is a law that states that debts must be collected within six years.
After then, you cannot enforce the collection of the debt as it is ‘Statute Barred’.
There are exceptions to this rule.
For example, if the debtor acknowledges or pays some of the debt within this time frame, then the time limit is reset to that point.
As well as this, if a CCJ is obtained against the debtor at any point, the debt cannot be declared statute-barred.
Preventing Debt from Occurring
The best way to prevent chasing old debts is to stop them from occurring in the first place.
With some careful preparation, you can prevent many debts far in advance.
For any financial agreement, it is best to discuss payment terms before committing any money.
Our team of debt collection experts have written an article that describes exactly what good payment terms should include.
In brief, they should clearly state what the debtor’s obligations are once an agreement is made.
It should specify the date when the person needs to pay the money back to the creditor, as well as any penalties and charges if they make a late payment.
As well as this, you can put contingencies into place in case the debtor cannot make a payment later.
For instance, this could be some kind of payment plan scheme which allows the debtor to pay the creditor back in instalments.
If payment terms were not created, do not worry!
This is especially true for private debts, where most agreements are made verbally.
For both business and private debts, try to keep a record of when the debt first occurred.
This could be an invoice, a written agreement or a letter.
It could also be something like a cheque made out to the debtor.
If you make an arrangement verbally, try to ensure that there is someone available to witness it.
As well as this, follow up all spoken communications with an email or letter.
This helps to create a paper trail which can be useful later when chasing old debts.
Sending an email with a read receipt is a good way to know if your debtor is reading your messages
Chasing Old Debts – What to Do
Many businesses have a ‘book’ of debts that are awaiting collection.
You must look at each one of these must independently, and take the time to chase each one properly.
When chasing old debts, it is important to know the proper and appropriate steps to take.
Prepare All Documentation
The first thing to do when you are about to begin chasing old debts is to gather the required evidence.
If you created payment terms that the debtor signed off, then this is a great place to start.
Having the evidence of the debt at hand will make sure that you are not caught out later on in the process.
Find the Right Person to Speak to
As simple as it sounds, speaking to the right person about the debt is obviously key.
Many people have wasted days’ worth of communications speaking to someone other than the person who owes you money.
An example of this may be a secretary in a business.
The only person who you should be speaking to when chasing old debt is whoever owes money.
If you cannot reach them or gatekeepers prevent you, this may be a sign that the person does not intend to pay.
Speak to the Debtor in a Professional and Polite Manner
When chasing old debts, it is important to maintain a professional and polite composure.
This can sometimes be challenging, especially as you may be feeling angry at the debtor.
At this point, it is best to open a line of communication with the debtor.
You should do this via the telephone if possible, or at the very least on an email.
We advise against Face-to-face meetings at this point.
They may be difficult to arrange anyway (especially if the debtor is aware of what you wish to speak about).
If the conversation becomes an argument, it will only make the collection process harder.
Try to maintain a professional high ground, explaining the debtor’s obligations to you and that payment is now due.
If the debtor becomes aggressive or confrontational, remain calm and reiterate your point.
On the other hand, there might be a simple explanation on why the debtor has not paid you.
If some time has passed, then chasing old debts in a polite manner like this will be very effective – the debtor may have simply forgotten to pay.
Follow Up Communications – Chasing Old Debts
If you have already tried to reach out to the debtor and there are no signs that the payment is forthcoming, you should make a second attempt.
A phone call will be useful again, but it may be better to issue this second communication in writing.
This proves that you have sent the message has and the debtor has received it.
This will stop the debtor from using the excuse that they did not get anything.
Again, just remind the debtor of their obligation to pay you and the fact that it is now overdue.
Chasing Old Debts – Escalating the Matter
If you have followed these steps and the debtor still refuses to pay, then it is time to escalate the matter.
There are many options for chasing old debts, but by far the best is to instruct a professional debt collection agency.
Frontline Collections, for example, recovers thousands of pounds worth of old debts every week for our clients.
Our team of recovery agents are experts at chasing old debts and provide a service that delivers the best chances of getting your money back.
We have an industry-leading average recovery rate of 90% on all undisputed debts and deliver our service with low commission rates.
Our service is open to private individuals, small business owners or those who are self-employed.
For more information on how we can help you with chasing old debts, speak to one of our friendly debt collection experts today.