Debt recovery and enforcement

Most undisputed debts are paid after a properly drafted letter before action. The ones that are not raise a different question: can a judgment actually be enforced?

The first question is enforcement

Before spending anything, establish whether the debtor can pay. A judgment against a company with no assets costs more to obtain than it is worth.

What to look for: filed accounts and the pattern in them; whether the company is still trading; charges registered against it; whether there is a personal guarantee; whether a parent company has given any obligation; and whether directors have taken steps that might themselves be actionable.

This analysis belongs at the start, not after judgment. It is the most common error in debt recovery and the most expensive.

Interest and compensation

On commercial debts between businesses, statutory interest and a fixed sum of compensation are usually recoverable under the late payment legislation, and reasonable recovery costs may be too.

This is frequently overlooked, it adds materially to what is claimed, and it gives a debtor a reason to pay now rather than later — which is the point of including it in the letter.

The process

Letter before action, complying with the relevant pre-action protocol. Most debts are paid at this stage, and a letter that sets out the debt, the interest, the compensation and the consequences of non-payment is considerably more effective than a demand.

Proceedings where no payment follows, in the appropriate track by value.

Judgment in default where no defence is filed, which is the majority of undisputed claims.

Enforcement, and the choice between methods matters: taking control of goods, a charging order over property, a third party debt order against a bank account, an attachment of earnings, or insolvency proceedings. Which is appropriate depends on what the debtor has.

If a defence is filed, the matter stops being debt recovery and becomes litigation. We will tell you at that point what that means for cost and prospects, because it is a different decision.

Insolvency as a lever

A statutory demand, and the prospect of a winding-up petition, is a powerful tool against a company that can pay and is choosing not to.

It is also a tool to use carefully. Where the debt is genuinely disputed on substantial grounds, presenting a petition can result in an injunction and an adverse costs order. The question is whether the dispute is real or manufactured, and that is worth advice before the demand is served.

What we do

Assess enforcement prospects first. Draft letters before action that include everything recoverable. Issue and obtain judgment. Advise on which enforcement method fits what the debtor has. And tell you when a debt is not worth pursuing, which is sometimes the answer.

What it costs

Fixed fees for undisputed debts by value — published in full on our detailed pricing page — plus court fees calculated on the claim value.

Where a defence is filed the matter becomes litigation and is charged hourly at £400 plus VAT. We tell you at that point rather than afterwards.

Questions

Questions people ask us

Can I claim interest?

On commercial debts between businesses, usually yes — statutory interest plus a fixed sum of compensation, and potentially reasonable recovery costs. It is frequently overlooked and it strengthens the letter.

They are ignoring my invoices. What is the first step?

A letter before action from a solicitor, setting out the debt, the interest and compensation claimed, and what happens next. Most undisputed debts are paid at this stage.

They say the work was defective. What now?

That is a dispute rather than a debt, and it changes the analysis. It may be a genuine defence or a delaying tactic, and the distinction matters — particularly if you were considering a statutory demand.

Is a winding-up petition a good idea?

Against a solvent company that is choosing not to pay, it is effective. Against a genuinely disputed debt it is dangerous — an injunction and adverse costs are real risks. Take advice before serving a statutory demand.

They have no money. Is it worth suing?

Usually not, and it is worth establishing before you spend rather than after judgment. Sometimes there are other routes — a guarantee, a director’s liability, an insurer — and those are worth looking for at the start.

The hub

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