Debt Recovery Part 2

Mediation

There are times when the parties in a dispute that revolves around debt cannot reach a solution that is mutually agreeable. This is when mediation may provide an escape from the impasse.

Mediation is when an impartial person, who is trained to deal with difficult discussions between people in dispute, acts like a referee in the dispute.

There can be a fee, which is based on how much is owed.

Court Proceedings – Action for an Agreed Sum

Provided that your contract says that your customer shall pay a definite sum of money to you and the duty to pay has arisen but the customer refuses to pay, then you can bring a claim for an agreed sum. This is not a damages claim, it is a debt action.

To bring a claim for an agreed sum, the duty to pay must have arisen (put another way, the time for payment must be certain, must have passed and the payment is now overdue).

Things to consider before commencing proceedings:

• Does the contract between you and your customer provide for how disputes should be settled and if so, have you complied?

• Does the contract provide for the payment of interest on overdue invoices? If issued, the particulars of claim should include a claim for interest and the basis on which interest is claimed.

• Conduct a cost/benefit analysis before commencing proceedings. Depending on the amount owed and the likelihood that the customer will contest your claim, the costs and inconvenience of proceedings can be high – particularly if it goes to trial.

• Be realistic about your chance of success.

• Do not start proceedings if you are not prepared to see them through. You will most likely be liable for the other party’s costs if you discontinue.

• The recovery of your own costs is not certain as it will depend on when the matter is concluded and how it is concluded.

Consider making a Money Claim Online which is the HM Courts & Tribunals Service internet-based service for claimants and defendants. It will be quicker and cheaper to use this service.

You can use this service to claim a fixed sum under £100,000 against no more than 2 people or organisations. You can register as an individual or an organisation and a debit or credit card is required.

As a guide only, the costs of bringing proceedings in a county court to recover a sum of money include (but are not limited to):

• Cost of service of documents (varies)

• Court fee which ranges from £35 when claiming less than £300 to £10,000 when claiming more than £200,000

• Money claim online user’s fees range from £25 when claiming less than £300 to 4.5% of the claim when claiming more than £10,000 but less than £100,000

• Case management fees

• Hearing fees

• Assessment of costs

• Enforcement (varies in relation to the method of enforcement)

• Solicitors’ fees and disbursements (by agreement)

The fees vary on the value and complexity of the case. Disputes will be heard in the most suitable place for them and in accordance with rules and procedures best suited to them.

The small claims track is a court procedure for dealing with the resolution of civil disputes, usually used for claims of £10,000 or less. The rules and procedures are designed to be less formal and more accessible to litigants in person. However, only limited costs are recoverable in small claims proceedings.

The fast track is a court procedure for dealing with the resolution of civil disputes, usually used for small and straightforward cases with a financial value of between £10,000 and £25,000.