Faqs
 
Below are questions that you may wish want to ask and which can be answered from looking through our database of answers:

  • Before You Start Proceedings

    • How long do I have to pursue a debt?

      The Limitation Act prevents a creditor pursuing a debtor via a County Court claim more than six years from the date of the debt/invoice. Sherwins Limited will pursue a debt which is over six years old by sending a solicitor's letter, making telephone call outs and by sending debt recovery officers to the address of the debtor to recover the debt.
    • What information do you need to start recovery action?

      The details of the debtor (name, address) and debt, for example the outstanding invoice to which the debt relates. If there has been any dispute as to the debt or its amount, we will require details of this in the event that the debtor responds with a dispute or refers to the dispute, so that we can deal with their response quickly and efficiently on your behalf. We will require details of the circumstances of the debtor to enable us to identify how to enforce a County Court Judgment in the event that one is obtained if the Debtor is not prepared to pay. We offer a pre-litigation service to ensure the whereabouts of the debtor and to assist in the identification of the enforcement method.
    • Do I need to send a letter of claim before issuing proceedings?

      Civil Procedure Rules require the creditor to send a letter of claim allowing the debtor a 14-day period to discharge the debt before court action is taken. If this notification is not provided, the debtor is likely to object to payment of the court fees and solicitor's costs claimed for the proceedings.
    • The debtor has not responded to the LBA. What happens now?

      At this stage we can issue court proceedings claiming recovery of the debt plus interest, court fees and solicitor's costs. We will contact you to confirm the expiry of the 14-day deadline and identify the enforcement method in the event that a County Court Judgment is obtained, so that enforcement action can be sought immediately in the event that the debtor does not settle the debt. The circumstances of the debtor are important, because if the Debtor is a ‘man of straw', then the prospects of recovery are low and therefore the issue of proceedings will cause you to spend money with little prospect of a recovery. In this instance, we offer pre-litigation investigations to ensure the whereabouts of the debtor and to identify the enforcement method.
    • What are the chances of the debtor paying if a judgment is awarded?

      In our experience, actually getting paid depends on a number of things. If your debtor has the money or assets to cover your debt and costs, then the chances of getting paid are good. Unfortunately, however, obtaining a Judgment and actually getting paid are often two different things. Remember that some debtors don't actually have the money. Individuals on low pay or companies with no assets may offer little chance of success. That is why, unlike many traditional firms of solicitors, we investigate the prospects of recovery before instigating proceedings. We will complete insolvency searches and internet searches, and can even instruct debt recovery officers to attend your debtor's address to ascertain whether they are still resident or trading from their last known address. During this visit, we will determine what assets they would appear to have so that we can advise you of which enforcement steps are likely to succeed.
    • How long does it take to get a judgment?

      It will usually take one or two days for the court to issue your claim and send this to your debtor. Once your debtor has received the claim they have 14 days to acknowledge receipt. If they fail to do this, you will be able to obtain judgment from day 15. If your debtor does acknowledge receipt of the claim, they have a up to a maximum of 28 days from receiving the claim to file a defence. Again, if they fail to do this, you can obtain judgment on day 29.

      Only if your debtor defends the claim is it harder to give a time estimate on obtaining judgment, as this will depend upon how long it takes the court to deal with the matter through a court hearing. In most straightforward debt claims you can expect to have a conclusion to the court proceedings and obtain a judgment within 8-12 weeks.
    • My debtor is a limited company which is insolvent. Can I sue the directors instead?

      The usual answer to this question is no. A limited company is a separate entity for legal purposes, which means that individuals behind the company cannot be held personally liable for any actions of the company, including any debts which the company may incur.

      However, in certain circumstances it may be possible to “go behind” this basic principle and hold the directors of the company liable for the company's debts.

      This is not something which will be applicable in all cases, and detailed consideration and discussion of individual facts would be necessary to determine if this is an option.
    • My debtor has moved abroad. Can I still pursue recovery of my debt?

      Absolutely. Regardless of where in the world your debtor may have relocated to, there are options available to you to allow you to pursue recovery of your debt.

      Depending upon the individual circumstances of the matter it may be that you issue a claim in this country, and then pursue enforcement of your debt abroad. Alternatively, a European Payment Order may be the best option if your debtor has moved to Europe. Finally, there is always the possibilty of commencing proceedings in the country that your debtor has moved to.

      Whatever the country and whatever the value of the debt, there will be options available to fit the circumstances.
    • What if the debtor is in receivership/liquidation, can you help?

      If your debtor is insolvent, then you will be prevented from bringing legal proceedings against them. We can check to make sure that they really are in liquidation or receivership, as some companies or individuals may claim to be insolvent when they still continue to trade. If they are in fact insolvent, we will make sure that your debt is registered and that you are notified of meetings of creditors and receive the liquidator’s/receiver’s reports.
    • What if the debtor disputes the debt?

      If the debtor disputes all or any part of the debt, they can communicate with you through us. You will be advised of any offer of settlement made and we can advise you of the prospects of success if you were to continue to bring legal proceedings. Subject to your instructions, we can often negotiate a settlement on your behalf.
    • What information do you need to start recovery action?

      The details of the Debtor (name, address) and debt, for example the outstanding invoice that the debt relates to. If there has been any dispute as to the debt or its amount we will require details of this in the event that the Debtor responds with a dispute or refers to the dispute so that we can deal with their response quickly and efficiently on your behalf. We will require details of the circumstances of the Debtor to enable us to identify how to enforce a County Court Judgment in the event that one is obtained the Debtor is not prepared to pay. We offer a pre-litigation service to ensure the whereabouts of the Debtor and to assist in the identification of the enforcement method.
    • My judgment is against a business, but it has ceased trading. Can I amend the judgment to pursue the individual behind the business?

      It is a common occurrence that individual creditors without legal assistance issue proceedings against the business name that they have been dealing with, such as ‘Bob the Builders’, when the actual debtor is in fact ‘Bob Smith trading as Bob the Builders’.

      Unfortunately, what usually then tends to happen is that the business ceases trading and the creditor is unable to pursue enforcement of their judgment, as the business has no assets against which enforcement action can be taken.

      In this instance, it is worth making an application to the court for the proceedings to be amended so that the name of the defendant can be reflected correctly as the individual trading as the business name. Once this is done, you can then pursue the assets of the individual for satisfaction of your debt, even if the business has ceased trading and there are no longer any assets available.

      As an alternative to the above, if your judgment is against a limited company which has ceased trading, leaving you no assets to pursue, you can consider the possibility of being able to pursue the director(s) of the company on a personal basis.

      The success or otherwise of being able to pursue the directors on a personal liability basis will depend upon the individual facts of the agreement with the company and the actions of the director and the company at the time. However, if successful, such a claim will enable you to pursue the assets of the director to settle your judgment, even if the company has since gone into liquidation or ceased trading.
    • In an application for a third party debt order, does the third party have to inform the court about every detail it holds about me? Can the judgment debtor oppose the giving of this information?

      Yes, the third party will have been served an interim third party debt order issued by the courts, to which they will be required to confirm whether they hold monies due to the judgment debtor and, if so, the value of the monies.

      The judgment debtor cannot claim that it is a breach of his or her rights under the Data Protection Act 1998, because the Act requires compliance with a court order such as an interim third party debt order.

      The third party will have been served with the interim third party debt order at least 21 days prior to the hearing of the ‘full’ third party debt order.

      The interim third party debt order will have be served on the third party 7 days prior to it being served on the judgment debtor. This is to prevent the judgment debtor withdrawing all their funds prior to the service of the interim third party debt order on the third party, in the event that the third party is a bank.
    • If I have an attachment of earnings order in place, what is the effect of the debtor moving jobs?

      Where a debtor leaves his employment, the AEO order lapses from the date of termination and remains in abeyance until the court directs payment from a new employer.

      There is an obligation on the old employer to notify the court of the termination of employment within 10 days of that termination, and failure to do so is an offence. In addition, where the new employer is aware of the existence of an AEO order on a new employee, they too are obliged to notify the court of the debtor's anticipated earnings.

      The debtor must also notify the court within 7 days of leaving employment or becoming re-employed, providing particulars of his anticipated earnings. Again, failure to do so is an offence, punishable by imprisonment of no more than 14 days.
    • What is the effect of a charging order?

      A charging order is the equivalent of a ‘mortgage’. It provides the creditor with security over the property specified in the order, subject to any prior mortgages and charges. To be effective, it is vital that the charge is registered with the Land Registry and entered on the charges register so that the creditor is advised of any proposed sale of the asset. The restriction will mean that no disposition of the property can take place without the creditor being notified, giving them the opportunity to recover their judgment debt from any proceeds of the sale.
    • I have a copy of a cheque that my debtor used to pay me with previously. Can I get money out of their bank account?

      The short answer is yes. If you have details of your debtor’s bank accounts, perhaps because you have their account details on your credit application, or because you kept a copy of a cheque they sent you, then you can apply to the court for an order that the debt they owe you be paid out of that account. This is known as a third party debt order.

      This will, of course, only be successful if the account is in credit, and only if the account is in the sole name of your debtor. If your debtor is an individual and has a joint account with their spouse or partner, then unfortunately you will not be able to obtain a third party debt order.

      Even if you do not have bank account details for your debtor, but know that they are owed money by a third party, perhaps because they are a business and you know that they are owed money by a particular customer, then you could consider applying for a third party debt order against that third party. If successful, this would mean that the third party pays you instead of your debtor.

      Despite affording the creditor security, however, it does not result in the judgment sum being paid. In order to obtain payment of the debt, the debtor must then issue fresh proceedings to apply for an order for sale. Many creditors do not take this additional step, but, due to the complexities involved in forcing a sale, instead wait for the debtor to take steps to dispose of the property voluntarily (see above). However, if the necessary criteria are met, then the ultimate sanction of a charging order is the debtor being forced to sell his property, which may also be his home.
 
 
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