In the complex world of debt recovery, dispute resolution emerges as an essential avenue for parties seeking resolution to a matter. It involves the legal pursuit taken by one party against another to resolve a dispute or claim, and forms a pivotal role in debt recovery strategies.
There are various ways upon which a creditor can pursue a debt owed, and in this article, Kismet Khaleeq considers one such approach.
1. Letter Before Action (LBA)
Prior to proceedings being issued, the creditor should send formal notice of the debt to the debtor in a letter known as a Letter Before Action (LBA). The content of the LBA will vary from matter to matter as compliance with the relevant pre-action protocols is essential. As a minimum however, all LBA’s should confirm:-
- The amount owed by the debtor, together with details of any interest and costs pursued;
- The deadline for payment from the debtor; and
- The consequences for non-payment or refusal to pay, including the right to charge statutory interest on the debt and pursuing any legal action
Proceeding to Court
If the debtor fails to respond or refuses to pay after receiving the LBA, the creditor can issue a claim through the County Court or High Court, depending on the amount owed and the complexity of the claim. The debtor will have a limited period of time to respond, failing which the creditor may seek a judgment from the Court in default.
Parties will need to be aware of the rules which govern this type of litigation as they set out requirements of what must be stated in a claim and in a defence – compliance with the rules is essential.
If the claim is defended, the Court will set out certain steps which the parties must comply with to take the matter to trial whilst considering Alternative Dispute Resolution at all times.
2. Judgment
If the debtor does contest the claim, the Court will, after compliance with other steps by the parties, hold a hearing to determine the outcome.
If judgment is obtained in favour of the creditor, there will be a Court order requiring the debtor to pay a certain amount by a certain date – this is known as a “County Court Judgment” or a “CCJ”.
3. Enforcement
At this stage, armed with a judgment, the creditor can pursue various enforcement measures to recover the debt. These methods may include insolvency proceedings such as bankruptcy or winding -up petitions, instructing a bailiff, seeking a charging order, or seeking an attachment of earnings order.
By understanding the steps involved and working with our team of legal specialists, creditors will have an opportunity to increase their chances of success in recovering such outstanding debts whilst ensuring compliance with the rules and various protocols.
If you have any questions about debt collection, our team of expert solicitors are here to assist you. Call us today on 0161 330 6821 or email bromleys@bromleys.co.uk.