Collecting a debt: the right procedures

Being owed money can be a frustrating experience. The only solution though is to pursue correct procedures for collecting a debt. If you are patient, and follow the proper steps, there's a good chance you will recover at least some of your money.

The Government's money, tax and benefits pages at www.direct.gov.uk offer advice on the best procedures for collecting a debt.

The first step is to communicate with the debtor. Establish the sum owed, what it’s for and the steps you have already taken to recover it. Pay attention to details like the names and addresses of yourself and the debtor, all paperwork relating to the debt, and a specific date by which you expect payment. You should allow at least 7 days, and give them the opportunity to put in writing any dispute they have with your statement.

The next step is to consider mediation. A mediation service helps find a solution to a dispute that is quicker and cheaper than a court case. The National Mediation Helpline is on 0845 603 0809. Note that there will be a fee of around £50 plus VAT for cases involving sums of under £5000, and a higher fee for disputes involving larger sums.

A solicitor's letter threatening legal action might be a successful measure, although again, this will cost a fee. Some solicitors specialising in debt recovery have fixed charges for this service.

A debt recovery agency will employ a solicitor to take legal action to recover your debt. There may be a fixed fee or the agency may retain a percentage of the money they recover on your behalf.

The final resort is a court case. This is rarely a satisfactory course of action as it can take months for a case to reach court and even if you win the court won’t automatically enforce a judgement.

It is possible to make an online court claim for up to £100,000 online at the Money Claim Online website (www.moneyclaim.gov.uk). If your case fits the criteria this could be the easiest way of collecting a debt.

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