Do I Need To Take Legal Action to Recover Debt?
Do I Need To Take Legal Action to Recover Debt?
When people are owed money, the first thing they do is begin their own debt recovery process.
This normally involves sending reminder letters, making phone calls or communicating via emails.
Are these are falling on deaf ears and the person that owes you money is still refusing to pay?
One common solution many people choose is taking legal action against the debtor.
This involves hiring the services of a solicitor that specialises in debt recovery through court action.
Quite often, taking legal action to recover debt can be a very expensive option.
For large businesses, this is not as much of an issue.
Some may even have their own legal team in-house to deal with such matters.
But for private individuals and those that are self-employed or are a sole trader, it can be too high of a cost.
If this is the case, then it is common for the debt to be written off.
This should never be an option, as everyone who is owed money should be paid.
Our debt collection experts explain what the alternatives to taking legal action to recover debt are, and the benefits that they can provide.
Should I take Legal Action To Recover Debt?
Maintaining a good relationship with your debtor is very important.
This is especially in the case of a small business or for someone that is self-employed.
Taking every step to ensure that future business opportunities and the income that would result from them should be taken very seriously.
However, if you are expecting payment from a customer that is refusing to pay, you will need to take the appropriate steps.
Choosing a course of action is an important decision, as this choice could affect your relationship with the debtor.
It is a good idea to investigate every option before making this decision.
After all, an alternative might be better than legal action to recover debt.
What Can I Do Before Taking Legal Action To Recover Debt?
Have you reached the point where a person or company owes you money?
If so, there are some steps you can take before escalating the matter.
For example, you can send a letter that should remind the debtor that their payment is due.
This letter should be professional in tone and request that payment is due and should be made as soon as possible.
If the debtor ignores this or it is unsuccessful, you can send a formal letter before action.
This letter will inform the debtor of your intentions.
It should also prompt them to pay you before you need to go to the expense of a court claim.
Mediation and Arbitration
As well as court action, there are many options to help those that have money owed to them.
Many companies specialise in resolving payment disputes through mediation.
This may be through providing legal advice to the creditor and helping them to understand what they can do to recover the debt.
For example, an agency may use mediation to resolve a dispute and ensure that a debtor pays the creditor.
This ensures that the matter is ended amicably and does not need to enter the courts.
Alternatives to Legal Action
Whilst legal action through the high court can be an effective way to recover a debt, it can often be an expensive method,
As mentioned earlier, this can be too great of a cost for many small businesses or private individuals.
Some solicitors can charge as much as £200 an hour for the time that they work on your case.
Court action can be a slow process, with progression being measured in months.
If the action is unsuccessful, you may be left with expensive court fees and legal expenses to settle.
As well as this, taking legal action to recover debt may result in a County Court Judgment (CCJ) against your debtor.
Whilst this is a positive outcome, you will still need to enforce the collection of the debt, costing even more money in total.
Many people believe that their only option is to take legal action via issuing court proceedings to recover the debt owed.
However, alternative methods that are just as effective and low cost do exist.
Debt Enforcement – Instructing a Professional Debt Collection Agency
If a debtor is unresponsive and you have informed them that you intend to take action, then it is time to seek professional assistance.
An alternative to a solicitor is a debt recovery agency.
This option has many benefits that are often preferable to other methods of debt recovery.
For example, a collection agency will be able to provide an effective and professional service that incurs a dramatically lower cost.
Every step will be taken to ensure that the relationship between creditor and debtor is untouched, ending all matters in an amicable way.
Frontline Collections has helped both business and private individuals who have chosen to take legal action to recover debt.
Speak to one of our debt recovery experts now for free advice on your debt recovery prospects.