Before Taking Legal Action

When a customer refuses to pay it's very tempting to rush into debt litigation in order to seek justice. It's important to put this to one side and weigh up carefully whether going to court is likely retrieve your money. The legal process can be longwinded, especially if your debtor disputes the debt, and even once a judgement is made and a CCJ put in place there is no guarantee that this will be paid. Always consider the commercial reality by considering the costs of any action against the size of the debt. Referring the debt to a Debt Collection Agency should get you results and if legal action is necessary a good Agency will give you advice on the best course of action, whether it will be cost effective and how long the process may take.

It is important to remember that the court cannot help if your customer has no money, assets or anything else of value. If your debtor is a limited company, you should bear in mind that there may not be any assets in the company's own name. This may not stop you obtaining judgment, but it may make it difficult if you need to take further action to make your debtor pay.

There are two main options for commencing legal action :

• Using a solicitor (directly or through the Debt Recovery Agency)
• Via the Court Service's internet based Money Claim Online service (www.moneyclaim.gov.uk)

Commencing legal action yourself is relatively easy but takes time and effort. Using a solicitor will save you effort but cost you more if the debt and costs aren't recovered. A solicitor should offer you advice on the different options for action against a debtor as sometimes lodging a claim is not the most efficient option. If the debt is small without complications then it may be suitable for Money Claim Online.

Before making a claim check the following details again :

• Are your invoices raised in exactly the right name?
• Do you have proof of delivery if the debt relates to goods supplied, or a signed order for services?
• Do you believe the customer has the funds to pay you?
• Do you have a record of all your collection activity to date?
• Is the debtor still trading ? do they have assets ? are there existing CCJ's against them?
• Do you have up-to-date contact details for the debtor (it may be worth using a tracing agent to ensure that you're sending paperwork to the correct address).