Debt collection FAQ’s

It is right for you to want to do your research about Debt Collection companies before you use one.

Below are the facts and answers to any Debt Collection FAQs that you have. If we have missed something out, feel free to email or call us.

Is it always worth trying to collect overdue payments or debts?

In short, yes, it is! But first be sure that you have a good chance of recovering the debt. Have you exhausted all your options, sent letters or emails, and made calls to the debtor? Perhaps there is a reason they are not paying you? For example, do they have cashflow problems? Is there a dispute that needs resolving?

If the debtor has CCJ’s against them, this could prove tricky. However, it is still worth considering. It has frequently been known for us to collect debts even when county court bailiffs couldn’t.

Should your customer have become insolvent, again your chances will be slim, but still possible to collect the debt! You may be able to retain ownership of goods.

If your customer has obtained a Debt Relief Order, there would be very little point in pursuing it. The order means that for a year, you cannot enforce your rights against them.

How can I collect the debts without offending or losing my customer?

There is never a guarantee, because of course everyone is different. However, there are methods that you and we use to “politely but firmly ask for payment.” Communication is key.

Discuss the issue with your customer, try to find out what the problem is. Negotiate or potentially be ready to compromise.

We could go as far as discussing the psychology of the wording one chooses to use when requesting payment, but that would be an entire other article or book. If its something you want to know more about, try looking up Phil Jones “What to say at exactly the right time.” Or NLP! Having trained mediators on your team always helps….

It is always worth remembering, that a customer who does not pay may not be worth keeping.

Ask for your payment. Get a payment date. Follow up. Be consistent and don’t let it go on and on.

How long does it take to collect a debt?

The amount of time to collect a debt does vary. However, for undisputed debts that don’t require legal action, on average it can take between 3 and 4 weeks. Although the fastest payment we collected was within 3 minutes.

How do I instruct you to collect a debt for me?

You can submit your debt online here. Or email us with the relevant information. You can of course call us and give us the details over the phone. We will then endeavour to contact your debtor within 24 hours.

Can I charge interest on overdue debts?

Absolutely! We have created a simple late payment interest calculator to work out how much you can legally add to the bill.

And as well as claiming interest, did you know that you can also charge a business a fixed amount for the cost of recovering a late commercial payment?

The amount you’re allowed to charge depends on the amount of debt.

If there is a dispute with the customer saying I have delivered faulty goods or services, what options do I have?

You can try resolving the dispute directly with your customer. However, if the situation has become a little tense, mediation is always a great alternative to taking legal action. It’s much quicker too. You can view more about Mediation here. At FJCM we have 2 qualified civil and commercial mediators.

Both parties must agree to mediate and seeing that 85% of mediation cases succeed, it is a very good alternative.

Who makes the decision to collect the debt via the legal system?

You do! We advise you on the situation and provide you with resolutions. But ultimately you make the decision.

If I need to submit to the small claims court, can you help?

Yes, we can help! We can submit it on your behalf. Court fees are payable in advance.

How much does it cost to issue a County Court Money Claim?

The court fee is based on the amount you’re claiming, plus interest.

Claim amount Paper form fee Online claim fee
Up to £300 £35 £25
£300.01 to £500 £50 £35
£500.01 to £1,000 £70 £60
£1,000.01 to £1,500 £80 £70
£1,500.01 to £3,000 £115 £105
£3,000.01 to £5,000 £205 £185
£5,000.01 to £10,000 £455 £410
£10,000.01 to £100,000 5% of the claim 4.5% of the claim
£100,000.01 to £200,000 5% of the claim You can’t make a claim online
More than £200,000 £10,000 You can’t make a claim online

To calculate 5% of the value of the claim, take the amount you’re claiming and multiply it by 0.05. If necessary, round down the result to the nearest 1p.

submitting your claim online makes it easier and cheaper too. Interest fees are automatically calculated for you.

  • Do note that the fees above are only for submission to the county court.

Can I claim my costs back?

Certainly, you can claim back the court fees if you are successful as they are included within the amount claimed.

Can I stop the court process at any time?

Should you wish to stop, you can send a letter to the relevant court to discontinue the claim.

Will I need a solicitor if I take the debtor to court?

For small claims it is not necessary. Just explain your case to the judge clearly and factually. However, if your claim is allocated to Multi-Track or fast track, we would recommend that you use a solicitor. Although its not a legal requirement.

Are there any other alternatives to taking legal action?

Sometimes bringing in a third party like a debt collection agency is exactly what it needs to get your payment. Alternatives to legal action might be Alternative Dispute Resolution (ADR) or Mediation. Mediation is when an impartial person helps both you and your debtor work out an agreement.

It may be against your principles to compromise on what you feel your work is worth, but compromising might be a solution.

We have a full article on mediation and ADR here for you.

What evidence will I need to collect the debt?

It would be ideal if all customers had a written signed contract. But don’t worry if you don’t. If you have delivered a product or service, perhaps you have a delivery note? Or proof of the service delivered. Text messages, emails and other documentation are always worth noting.

Make sure that you keep copies of any correspondence you send when chasing the debt.

Even if you don’t have direct written proof or evidence of terms agreed or a contract, you STILL have a chance. When you are chasing the debt, keep the responses from the customer, as they may reply in a way that suggests that there is an agreement between you.

What is the small claims procedure? And how difficult and time consuming is it?

Applying to a county court to claim the money you are owed or taking someone to a ‘small claims court’ is the start of the small claims procedure.

If you are claiming for a fixed amount of money, you can make your claim online. It is relatively straight forward to do. But it can be quite time consuming.  Debts up to £10,000 are classed as small claims. Over £10,000 and up to £25,000 are Fast Track. Debts over £25,000 are classed as Multi-Track. The latter two are a more formal affair and we recommend seeking professional advice and representation.

After you make your claim

The person or business who owes you money (the ‘defendant’) must respond to your claim within 14 days of receiving it.

You must tell the court by updating your claim online if you get paid within this period.

Should you not get payment or if the defendant doesn’t file a defence, counter claim, or part admission, then once the 14 days are up you can request judgment.

If the defendant files a defence or counter claim, you will be offered telephone mediation. If you don’t feel that mediation would work, then you can go directly to a court hearing.

How do I prepare for the court case?

First, the judge will send you an “order” stating what they require filing before the hearing date. This is usually the evidence to support your claim.

So next you need to gather all your evidence together. Photographs, emails, anything that might be relevant. Proof of trying to negotiate or compromise. Try to avoid derogatory or slanderous comments. Stick to the facts.

Then submit to the court.

If I win the court case, will that guarantee payment?

Sadly, no it doesn’t. When you win the case, you will be awarded “Judgment.” If the debtor still refuses to pay you, then you can “enforce judgement” through the court by using the county or high court bailiffs. To use high court bailiffs the debt will need to be over £600.

What happens after a County Court Judgment (CCJ)?

If a debtor has not paid you within 30 days of the judgment made against them, then their details are registered as a CCJ. CCJ’S stay on the register for 6 years.

As soon as you get the hard copy of the judgment you can request a warrant of control or a High Court Writ of Control. The cost is either £66 or £77 depending on which court you use to request it from.

If the debt owed is under £5000 you can send the warrant to the county court bailiffs for them to enforce. If the debt owed is over £600 you can transfer it to the High Court for them to enforce.

 

How can I stop or prevent bad debtors?

A good credit control procedure to follow is key. Would you like a free credit control cycle calendar? Send us an email and we will send you one.

Credit checking your customers is always worth while too, they will never know that you have done it.

Ensuring that you have all details for your customer is very important. Full names, addresses, contact numbers for example.

And making sure your customer is aware of your payment terms is key.

For more useful information and guidance visit our useful resources section on credit control here. There are lots of useful articles and information that will help. If you don’t have time, call us and we will do it for you!

Do you have a question? Email or Enquire Here