In the small number of cases where Advocate’s action does not result in payment the next course of action to be considered is the issue of legal proceedings against the debtor. It is important to take into account several factors before incurring costs on litigation. Most importantly whether or not the action would result in payment and if the costs involved in taking the action are financially viable.

By this stage of the process our file will include information on the debtor’s current financial position, any previous legal action taken against them and the result of any previous legal action taken against them. If we are of the opinion that there is little or no chance of recovering payment through litigation we will advise you accordingly and recommend that you enquire with your accountants if the debt qualifies for tax relief.

If there are unsatisfied County Court Judgments registered against the debtor, it is unlikely that they would respond to a further Claim issued in the County Court. You could issue proceedings, which in all likelihood would be ignored resulting in a Judgment by default, however, the Judgment would in all probability not be paid and you would simply be increasing your losses by incurring the costs involved in issuing the Claim.

If the debtor has a history of satisfying Judgments issued against them, it indicates that genuine cash flow problems exists and that it will be necessary to take Court action against them to secure payment. The time and cost involved in issuing Court proceedings will undoubtedly be an inconvenience, however, it is likely that the action would result in payment of the debt.

Alternatively it may be prudent to consider issuing Insolvency proceedings against the debtor. If the debtor clearly has the means to pay but refuses to do so, it is likely that they are prioritising which of their creditors to pay first and that those creditors supplying ongoing services will receive preferential treatment. If due to non-payment, you have ceased suppling services to the debtor, you will likely be at the bottom of their list of priorities and you should not expect to receive payment without taking further action.

Insolvency proceedings and the subsequent issue of a Winding up Petition become more cost effective compared to issuing a Claim in the County Court when the debt to be recovered exceeds the sum of £10,000.00 and the Court fee rises to 5% of the Claim value. Insolvency proceedings are an effective and powerful course of action which will often result in payment where Court action may not.

If you are considering instructing us to recover a debt and you are concerned that legal proceedings may be required, you should take into account that just over 80% of the instructions we receive are settled in full without recourse to litigation. If we are unable to recover payment, we will advise on what we consider to be the most appropriate course of further action.

If we recommend legal action we will supply you with full details on the process and the costs you can expect to pay and if those costs would be recoverable. It would then be your decision on whether or not to go ahead and issue the proceedings.

You will find further details on County Court and Insolvency proceedings by following the links below: