Debt collection can generally be split into three different stages: pre-legal, legal, and enforcement.
The ‘Pre-Legal’ Stage
Pre-legal has quite a wide-ranging definition; generally, however, it refers to any action being taken before proceedings are issued and can include emails, texts, letters, and phone calls. This includes any actions taken in-house, by debt collection companies, or by solicitors acting for the creditor.
Whilst pre-legal strategies differ between companies, there is one minimum requirement that must be adhered to in the pre-legal stage. This is that a pre-legal Letter Before Action (LBA) must be sent. There is no obligation for anything further to be done and a creditor can send an LBA (also known as a Letter of Claim) the same day that a balance becomes overdue if they want to. Notwithstanding the above, most creditors will implement a cycle of emails and calls before sending an LBA.
With Debt-Claims, there are two pre-action services available. The first is our informal Late Payment Demand (LPD). Our LPD is a short and to-the-point letter using language designed to maintain the relationship between the creditor and their customer, but also making it clear to the debtor that Debt-Claims Solicitors are instructed and will escalate the matter if payment is not forthcoming. An LPD is not a mandatory requirement but is often all that’s needed to get a debtor to pay.
The second is our LBA. The real power of what we offer at Debt-Claims is our LBA which is hard-hitting and to the point, yet fair and professional. Our intelligent robots use the information provided by you on the portal to draft a bespoke LBA on every occasion.
Collectively, around 90% of debtors pay following receipt of one of our letters and with LPDs costing just £2.50 and LBAs at £12.50, it is an affordable and cost-effective way to proceed.
The ‘Legal Stage’
The legal stage consists of submitting a claim form to the Court in order to recover payment owed by a debtor. Once submitted, the Court will issue the claim form. Depending on the Court, they will either serve the claim form on the debtor or send the claim form back to the claimant to then be served on the debtor.
Most claims for money owed are issued through the Court’s Money Claims Online service (MCOL). This electronically submits the claim form which is then issued by the County Court Business Centre (CCBC) and the CCBC serve the claim form on the debtor. The CCBC, although in Northampton, is not to be confused with Northampton County Court.
If a claim is disputed, then the CCBC will transfer the matter to a local court where it will follow either the small claims track, fast track, or multi track process and ultimately be listed for a hearing. If a claim is not disputed and not paid, then you can request a County Court Judgment (CCJ) in default of any response. Similarly, if the debtor files an admission or part admission, then you can request a CCJ by admission. A CCJ is needed for the enforcement stage.
Claims with a value below £100,000 can be issued via MCOL. If a claim is £100,000 or above, then it needs to be issued through the County Court Money Claim Centre (CCMCC).
The Debt-Claims’ portal is unique in that it is integrated with MCOL. This means that whatever action you choose on our portal is sent direct to MCOL and actioned by the Court. This provides for an instant turnaround on your instructions and real-time updates, without the need to chase updates.
The ‘Enforcement Stage’
When a debtor does not pay what is owed under the CCJ, then the creditor will need to begin enforcement action. Enforcement is the process of taking steps to compel the debtor to pay what they owe.
There are several types of enforcement options available to a claimant which are summarised below.
Depending on the circumstances of the specific claim, certain enforcement types will be of more benefit to the creditor than others. When you instruct us to enforce a CCJ via our Debt-Claims portal, we do all the work and provide all updates to you via the portal, taking the stress out of the situation for you.
County Court Bailiff
A County Court Bailiff can enforce judgments up to the value of £5,000. Court Bailiffs will make attendances at the debtor’s property to collect payment of the judgment balance or remove goods that can be sold at auction to cover what is owed under the judgment. If the debtor is unable to extinguish the debt, then the Bailiff will attempt to enter a payment arrangement with the debtor.
High Court Enforcement Officer (HCEO)
High Court Enforcement Officers (HCEO) can enforce judgments with a minimum value of £600 (unless the judgment is for a debt which is regulated by the Consumer Credit Act). A HCEO will make attendances at the debtor’s property if payment is not forthcoming following an initial notice. If payment is not collected upon attendance, then similarly to Court Bailiffs, a HCEO can remove goods to sell at auction or enter a payment arrangement with the debtor.
Attachment of Earnings (AOE)
An attachment of earnings order directs a debtor’s employer to make regular payments to a creditor until the judgment debt is discharged. This method of enforcement is only available where the debtor is an individual and is employed, a Court will set the rate of payment.
Third Party Debt Order (TPDO)
A third party debt order is used where a third party holds money on behalf of the debtor, and can be forced to pay the money to the creditor. It is generally used against a bank, but can be used against any third party that holds money for the debtor. This method of enforcement can be used against either individuals or companies.
A charging order is a method of securing the judgment against a debtor’s property (either an individual or company). Once registered, a debtor will have to pay the judgment balance as a priority if they intend to sell their property. In some circumstances, it may be possible to obtain an order to force sale of the debtor’s property.
A questioning order is an order that compels the judgment debtor (or director of the company, if the debtor is a company) to attend Court to be questioned by a judge. The purpose of the questioning is to establish why the debtor has not discharged the debt and to ascertain the financial status of the debtor; it can often end in a payment arrangement being secured.