Debt Recovery – the start and the finish
by Rockliffs Solicitors
While it is important your legal team is able to effectively pursue debts, whether or not to pursue them in the first place, and what happens after it has been determined a debt should not be pursued further are important elements in recovering debts.
Deciding whether to pursue
Costs in debt recovery matters are variable depending on the circumstances of each case. It is important to consider potential costs before deciding whether or not to pursue a debt with which you are having difficulty. Further, it is critical that debts be assessed and re-assessed during the debt recovery process to ensure you are not "throwing good money after bad". It is important whoever is handling debt recovery for your business is mindful of such commercial elements.
It is also critical that you and your legal counsel discuss clearly the issue of costs upon commencing recovery of a debt. An effective manner of limiting your exposure is to set and agree upon a "costs maximum" with your legal advisor. If costs approach this set maximum, you and your legal team can then re-assess your options regarding pursuing the debt.
Closing the file on a debt - When the end is not the end.
One of the advantageous of utilising a solicitor in pursuing a debt is that, even if you decide a debt is not worth chasing beyond entry of judgment, that judgment can have extremely negative effects on an individual's credit record. That judgment is also enforceable for a period of twelve years.
Even though a debtor may not be in a position to satisfy the debt following entry of judgment, financial circumstances can change substantially over the following months and years. Thus, at any point with the twelve year time frame, you may re-commence pursuing the debt plus scale costs and interest (currently, the interest rate prescribed by the court for interest is 9% per annum) with no need to go to the trouble of re-stating the facts which gave rise to the debt, or re-filing and re-serving a Statement of Claim. Also, whilst you may have discontinued pursuing the debt, the judgment's effect on an individual's credit records may prompt them to settle the debt at a later time of their own accord, converting a bad debt to a recovered debt without any further costs incurred by you or your business.