• Taking a Debtor to Court

    If you are owed money and the person who owes it to you will not pay it back, you may be considering taking them to court to recover what you are owed.

    If you are having difficulty encouraging a debtor to speak to you about a debt or propose terms for payment, issuing a claim in the County Court may be a suitable course of action.

    If the debtor is able to pay and acknowledges that the debt is owed, it will usually prompt payment (or at least terms of repayment). Whether the debtor is an individual or a business, having a County Court Judgment registered against them is likely to severely affect their credit rating; as a consequence, most debtors will do what they can to avoid this, i.e. make payment!

    Issuing a claim may also prompt discussion around what the debtor considers to be a legitimate reason why he does not owe the debt. The court process can prompt a defendant to raise a defence that he has not previously given. For example, in a case where a service have been provided to the debtor but not paid for, the issue of a claim may prompt the defendant to explain why he feels that he is not liable to pay or the service he received. Defences like this can be a useful ‘jumping off point’ for further discussion or perhaps mediation (where a third party mediator steps in to try and encourage the creditor and debtor to agree terms without going to court).

    If you decide to take the debtor to court to recover unpaid debt, the case will be dealt with by the County Court Money Claims Centre. You can issue a claim quickly and easily using Money Claim Online (an online Court Service resource for issuing claims). Alternatively, you can contact a solicitor to do this for you. If you have any doubts about the legitimacy of your claim or whether you are issuing a claim against the correct ‘debtor’, you should give consideration to using a solicitor. If you bring a claim when you are not entitled to do so, you may find that the ‘debtor’ raises a valid defence or even a counterclaim – which could mean that a court decides that you are liable!

    Here are some common questions around the process of issuing a County Court Claim:

    What you should do before starting court action?

    Before taking the debtor to court, you must send a letter to the debtor, detailing the amount owed and why. The letter should tell them that you will start legal action against them unless they pay back what they owe, within a given time period. There are standard templates available online for a ‘Letter Before Action’ (‘LBA’). These are of varying quality, so you should take care to ensure that the template is fit for purpose and that it is accurately completed.

    When you issue legal proceedings, the debtor will receive a copy of a claim form. If the claim form contradicts the content of the LBA, the court may refuse to grant judgment in your favour.

    The courts will require the parties to try and resolve the matter before it gets to the stage of issuing a claim, so you should make every effort to reach an agreement with the debtor. An LBA is a good way of demonstrating your intention to reach a resolution.

    What happens when the debtor receives a claim form from the court?

    Once you issue a claim, the court will send a number of documents to them including a copy of the claim form with the details you have submitted and a response pack.

    Details of how much they owe you are provided in the claim form, and the response pack contains forms that the defendant needs to complete. The defendant will be invited to either:

    • accept that they owe you the money;
    • accept that they owe you some but not all of the money you have claimed; or
    • accept that they owe you some but not all of the money you have claimed; or

    If the defendant ignores the claim form, you can ask the court (via the Money Claim Online system) to enter judgment in default of acknowledgment (i.e. because the defendant failed to acknowledge the court documents). In such a case, you could have judgment in around 3 weeks from the date of issuing your claim.

    The debtor may contact you to try to reach an agreement to pay back the money owed without going to court. However, if they do this, they must still meet the deadline (usually 14 days) for sending the documents back to the court; unless both parties notify the court of an extended deadline. The parties may also agree to proceed to mediation, where a third party will help the parties to the claim reach a resolution.

    What happens if the debtor agrees they owe you the money?

    If the debtor agrees that they owe you the total sum you have asked for on the claim form, they will complete the admission form in the response pack and send it back to you directly

    Can the debtor make an offer to pay instalments?

    Using the admission form, the debtor may choose to ask you if they can pay off the debt in instalments. They may say how much they want to pay in each instalment and when they want to pay you.


    What happens if you accept the debtor’s repayment offer?

    If you are happy with the debtor’s offer, you may ask the court to make the order without the involvement of a judge or a court hearing. Then the court will enter a County Court Judgment (CCJ) in the Register of Judgments.

    The court order will be based on the amount the debtor has agreed. The court will seal an order and send it to the debtor. The order will confirm:

    • how much they need to pay
    • when they need to make payments
    • the address where they need to send payment

    What happens if you do not accept the debtor’s repayment offer?

    If you decide not to accept the payment offer from the debtor, a court official or a judge will decide what amount is fair. There isn’t usually a court hearing for this decision and the debtor can ask for the decision to be re-determined if they are not happy with the outcome. If this is the case, they must make their request, in writing, to the court within 14 days.

    What happens if the debtor does not make an offer of repayment on the form?

    If the debtor decides not to make an offer for repayment on the admission form, you can decide how much and when the debtor should pay. Alternatively, you could ask for an order for the whole amount immediately.


    What if the debtor only agrees to owing you some of the money?

    The debtor may agree to owing you only part of the amount you have claimed, for example he may refute that he owes interest you have charged if there is no agreement to charge interest and no statutory provision for you to charge it.

    If the debtor does dispute the amount owed, they will need to complete an admission form with details of what they do accept liability for, along with a defence form stating what they don’t accept.

    These forms will be sent to the court. The court will decide what steps the debtor must take regarding the part of claim they have disputed, which could lead to a hearing.

    The debtor must make arrangements for paying you the part of the debt they have agree with, which they may ask to repay in instalments.

    If the court agrees that the debtor only owes you some of the money, a court order will be made for the amount of the debt the debtor agreed to.

    What happens if the debtor does not agree to owing you the money?

    The debtor will need to complete a defence form, stating their reasons; if they do not agree they owe you the money you claim. By filling this form in, the debtor is ‘defending the claim’.

    The debtor will need to complete a defence form, stating their reasons; if they do not agree they owe you the money you claim. By filling this form in, the debtor is ‘defending the claim’.


    What happens if the debtor ignores the claim form?

    You can ask the court for an order to be made against the debtor, if they do not respond to the claim form within 14 days. This is known as ‘entering judgment by default of acknowledgement of service’. In fact, the vast majority of claims issued each year will end up in this category!

    You may now decide how and when you are paid back the money the debtor owes you. This usually gives them 14 days to pay, although the order could order it to be paid immediately (forthwith).

    The court will send the debtor the order. It will tell them:

    • how much to pay you
    • when to pay you
    • the address for payment

    How much interest can you claim?

    If you have an agreement to charge interest, you can charge it at the contractual rate that applied (subject to the validity of the contract and clause). If you do not have a contractual rate of interest and the debt is owed to you (as a business) by a business, you should be able to charge interest at 8% over the Bank of England base rate. You may also be able to charge compensation for issuing invoices and the reasonable costs of collecting the debt – see The Late Payment of Commercial Debts (Interest) Act 1998 and The Late Payment of Commercial Debts Regulations 2013.

    What if the debtor still won’t pay?

    If the debtor still won’t pay, even after you get a court order against them, a number of other options are available to you to make them pay. This is known as ‘enforcement action’.

    There are several methods of enforcement, including:

    • Enforcement against the goods of the defendant under a High Court writ;
    • enforcement against the goods of the defendant under a County Court warrant;
    • charging orders against the defendant’s property;
    • attachments of earnings to deduct sums from an individual’s salary/wages;
    • third party debt orders to recover money from a bank account or amounts owed by a third party to a defendant.

    You can also ask the defendant to attend court under an order for questioning, to assess the best route of enforcement.

    Many of the enforcement routes described above will require an additional process or hearing. Often, one of the best routes to try first will be to instruct High Court Enforcement Officers to attend to attempt to seize goods belonging to the defendant.

    What makes Burlington different?

    As High Court Enforcement Officers, Burlington can assist you with transferring your CCJ for enforcement in the High Court. The transfer process takes 2-3 weeks and cost just £60.00 (the cost that the courts levy for sealing a High Court writ). If we are successful in enforcing your judgment, the defendant pays our costs. If the defendant fails to make payment, we may be able to remove goods and sell them at auction to recover the amount owing under the writ. If the defendant has no goods that can be seized and refuses to make payment, you will be liable to pay a fee of around £75+VAT to cover the costs of our attendance.

    For more information on enforcing judgments in the High Court, please contact a member of our Client Services Team on 0330 900 8000. If you have a judgment that you are ready to enforce, you can also instruct us online.