Whether you have loaned money to a customer as a financial provider, or to a friend or colleague on a private basis, not being repaid on time not only causes you significant problems with you own cash flow, but it can put a detriment on the relationship you have with the borrower. So how can you best recover money owed?
To help you recover money owed for monies loaned, Debt-Claims Solicitors wanted to find a way to communicate effectively to a debtor (who had defaulted on their payment) that the creditor wants to retain the relationship, but also wants the debtor to know that solicitors were on call if the account was not brought up to date.
The solution to this is our Late Payment Demand (LPD). Whilst it can be used by a creditor for any debt owed, it is particularly useful where there is an ongoing relationship and the debtor will have to make future payments in accordance with the contract. Our LPD is a shorter and less formal letter that reminds the debtor that a payment is due and if it’s not made within a specified number of days, that the creditor will escalate the matter for formal legal action. The softer wording used is designed specifically to make a debtor take stock of the situation and get their account in order; at the same time, our solicitors headed letter shows the debtor that the creditor is not going to tolerate the late (or none) payment any longer. A creditor can, if they wish, also claim interest and contractual costs from the debtor, specifics of this can be detailed on the LPD.
There are a few important points and steps to note about debt recovery for monies loaned:
- Generally, debt recovery actions for monies loaned are undisputed. A customer will have received a sum of money and failed to repay in accordance with the terms of the agreement.
- The costs of sending an LPD are incredibly small; just £2.50 to send an LPD via email only, £5 by post, or for post and email it’s £6.
- If the debtor does not pay following the LPD, you can escalate the matter to send a Letter Before Action (LBA) in just a few clicks. An LBA is a formal letter that must be sent before legal proceedings are commenced and with Debt-Claims, it costs just £12.50.
- Generally, a creditor will have the right to claim interest at 8% per annum under the County Courts Act 1984. Alternatively, depending on the terms of the loan agreement, a creditor may be entitled to contractual interest and costs. At Debt-Claims, our portal prompts a user to claim interest if they want to.
- If the debtor does not make payment following our LBA, then proceedings will need to be issued against them. With Debt-Claims’ portal, a LBA can be escalated to a money claim in less than 30 seconds and as the portal is integrated with the Court’s Money Claims Online system, as soon as it is submitted via our portal then it is submitted to the Court. This allows for an instant turnaround on instructions for claims, judgments, and enforcement. Crucially, for all uncontested small claims matters (less than £10,000) Debt-Claims only charges the same costs that are recoverable from the debtor and automatically adds these onto the claimed balance. This means that once a creditor has been paid, their costs are recoverable in full.
If you or your business need to recover money owed following a loan that you have given, then let Debt-Claims collect that money quickly and cost effectively. Once you’ve registered for free with Debt-Claims and chosen the service you require, simply choose the agreement type for either ‘loan agreement’ or ‘short-term loan agreement’ and our portal will draft bespoke documents based on that agreement type.
