Debt Recovery

1. Debt Recovery Recovering unpaid rent or the cost of damage caused to a property can be a daunting and sometimes fruitless task – but it doesn’t have to be. Our experienced team assess each case on an individual basis before using our practical and extensive experience to secure the best possible chances of recovery. "A fresh  approach  to law." Woodstock Property Law is the trading name of Woodstock Property Law Limited (registered in England and Wales with company number 09002137). Authorised and regulated by the Solicitors Regulation Authority (SRA No. 614145) see www.sra.org.uk/rules Postal Add: 7-9 Haven Road, Poole, Dorset, BH13 7LE       Registered address: The Barn, Course beer Farm, Whiddon Down, Devon, EX20 2QZwww.woodstockpropertylaw.com

2. Stage one – Review – Know your Debtor! Before attempting to recover the sum of money owed, it is important to consider the prospects of success. There is little point throwing good money after bad. There are searches that we can carry out to assess prospects of a successful recovery, which are:- • Instructing a tracing agent to make an employment or location search on the debtor. If the debtor has moved it can take several attempts to successfully trace them and it is often worthwhile attempting a second trace after a period of time has elapsed; • Check the insolvency register to see if the debtor is bankrupt or subject to an IVA, debt relief order, or any bankruptcy restriction order; • Conduct a Land Registry search to establish ownership of a property using an address you have for the debtor. Inspection of the charges register will also ascertain whether the property is mortgaged. • Consult the attachment of earnings index to find out if a debtor has any attachment of earnings orders against them. • Check the register of judgments, orders and fines to see if the judgment debtor has any other judgments against them. • Conduct a search at Companies House (the official UK government register of UK companies) for any company or limited liability partnership the debtor may have an interest in. We can also obtain basic information about the company and its latest filed accounts. • Check for any insolvency procedures against companies by searches of the Bankruptcy and Companies Court, Companies House and the London Gazette. The result of this searches will also allow you to make an interned decision as to the best method of enforcement. Stage two – Letter before action Before issuing proceedings you must send the debtor a letter before action. This letter is a legal requirement and sets out: the sum owed and on what basis it is owed; evidence in support; options for advice and a deadline for repayment (14 or 30 days depending on the creditor/debtor relationship).

3. Once the deadline to pay has expired we can then issue a money claim online. Before issuing a money claim we often send a final letter before action which in some circumstances prompts payment. You may also consider sending the debtor a without prejudice offer of settlement, inviting them to pay a reduced sum or the full sum by way of instalments. Stage three – Money claim If having sent an letter before action, final letter before action and or without prejudice offer of settlement no satisfactory response has been received then, if the debt has good prospects of successful recovery, then it is usually time to issue a money claim. The length of time to obtain a judgment very much depends on the response from your debtor. They may not respond to the claim, in which case we can look to obtain a default judgment and move quickly to look at methods of recovery. If they defend the claim then it’s time to push your case through the courts to a final hearing or look to achieve early settlement. Whatever course your claim takes we will do our best to offer fixed fees throughout, so that you can manage your costs, and we will advise you as to your options every step of the way. Stage four – Enforcement Once you have obtained a money judgment, if the debtor does not pay the sum owed then you may need to take steps to physically recover the sums due. This is where the information gathered on your debtor comes in to play! There are several methods of enforcement which should be considered, each having its own risks, benefits and restrictions. Not all methods are always available and sometimes it takes more than one method to recover of the debt. • Third party debt order (TPDO): Sums owed that are in the hands of a third party (such as the debtor’s bank) are frozen and seized. TPDO’s are not the most popular method of enforcement, as they depend on there being a third party debt at the time of execution - which is often somewhat of a gamble. However, they can be useful for example, where the creditor knows that the debtor has a bank account into which his salary is paid and they know the date the salary is paid they can be a useful tool.

4. 2. Execution against goods: Execution against goods is a popular method of enforcement. It requires the issue of a court order allowing an enforcement officer to seize and sell the debtor's goods (provided they are not exempt goods or do not belong to a third party) and raise funds to satisfy the debt. The debtor will pay the enforcement officers costs - not you. Execution can be done quite speedily, but it depends on the judgment debtor having goods of sufficient value, for examples of goods include vehicles of some value. It is crucial to bear in mind that vehicles are often subject to finance agreements. The enforcement agent will check this before seizing the vehicles. 3. Charging orders: An application to secure a charge over a debtor's beneficial interest in land, securities or other assets i.e. property is another useful method. The charge secured prevents the debtor from selling the asset without first settling his debt - provided that there is enough equity left after payment of any prior creditors, for example their mortgage. The process for obtaining a charging order can be slow and a charging order itself does not realise funds to satisfy a debt. The judgment creditor then has to apply separately for an order for sale of the property. Alternatively, he could simply await its sale in due course by the owners, or following an order obtained by other creditors. The court will use its discretion and will examine whether enforcement by this method is proportionate. The court may choose not to secure a small judgment when this could be enforced by another method. A charging order is most effective where there is substantial equity in a property and the debtor is the sole owner. 4. Attachment to earnings (AEO): An AEO order provides that a proportion of a debtor's earnings is deducted by his employer and paid to the creditor in instalments until the judgment debt is satisfied in full. AEO’s are a popular method of enforcement. They are inexpensive and fairly risk free. Automatic deduction from wages means that you do not have to rely on the debtor making payment. However, it depends on the judgment debtor being in employment and it can take a long time to pay off a large judgment debt by this method. Also, should the debtor change employment a new AEO is required. Creditors also need to be aware of employment details being false or out of date.

5. 5. Insolvency proceedings: bankruptcy and company liquidation If you are owed more than £5000 by an individual debtor, you can apply to make them bankrupt. You can also apply for a debtor company to be wound up if they owe more than £750. After a bankruptcy or winding-up order is made, the judgment debtor's assets will be collected by a trustee in bankruptcy or liquidator, and distributed among all the creditors. The first step in starting bankruptcy proceedings is to serve a statutory demand on the debtor. This alone is sometimes sufficient to recover the sums due or open up the lines of communication to enable the parties to agree settlement by instalments. If the statutory demand doesn’t provide a satisfactory result then full bankruptcy proceedings are required. This can be expensive and time-consuming and may not ultimately lead to recovery. It can however be a useful method of recovery if sufficient assets are available. If the debt is genuinely disputed or if the judgment debtor has a genuine cross-claim or right of set-off, then the courts may not only dismiss petitions, but also penalise those bringing them in costs. Bankruptcy should therefore only be considered for clear and undisputed debts. 6. Information Hearing If you have little or no information on the debtor’s assets income and expenditure then you can call them into court to give evidence on their finances. This then helps determine the best method of enforcement. It also provides an opportunity to agree a settlement plan in person. To recover a debt it’s important to follow the right procedure, but no one size fits all. Our team at Woodstock have years of practical experience recovering debts. We will employ that knowledge and experience to assist you in successfully recovering money which should be in your pocket. If you would like more information please contact us. Tel: 0330 088 5792 Email:contact@woodstockpropertylaw.com Disclaimer: This information does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express of implied.