Debt-recovery or credit-collection agents are utilised by numerous organisations in order to redeem a variety of different payments from debtors, whether that be for trade debts, rent arrears, parking charges, or even utility bills.

Debt collection companies must obtain a consumer credit license from the Financial Conduct Authority, which is in place to regulate consumer credit activities, and monitor any unlawful tactics against consumers.

It is not unusual for debt to be disputed, although there must be substantial reasoning behind the dispute, and will ultimately cause conflict between the consumer and the debt collection agency.

Pre-Proceedings Recovery

Retainer we offer:

• Deduction only - 'No win, no fee'
• Staged Fixed Fee + 10% + VAT* deduction
• Hourly rate

We will then send a Letter Before Action to the Debtor demanding payment of the outstanding debt within 14 days. The letter is sent free of charge. There is only a charge for this work on a staged fixed fee or hourly rate retainer.

The Letter Before Action will claim the full debt amount due to you together with applicable late payment interest, fixed compensation and reasonable recovery costs (‘the additional recoverable sum’).

No win, no fee:

If the payment is made within 14 days and the debt is settled, then our fees will either be:

• 15% + VAT from the entire sum claimed (principle debt plus the additional recoverable sum), OR
• We will take the additional recoverable sum as our fees

… whichever is the higher of the two amounts*.

Example:

Scenario 1

• Principle debt amount £5,000.00
• Additional recoverable sum £570.00
• Total claim amount £5,570.00
• Our fees at 15% + VAT = £835.50

Scenario 2

• Principle debt amount £4,000.00
• Additional recoverable sum £750.00
• Total claim amount £4,750.00
• Our fees by taking additional recoverable sum = £750.00

*Please note, if your business is based outside the UK then we will apply a deduction of 18% of the principle debt sum (inclusive of VAT) and ALSO charge the additional recoverable sum as our fees.

Hourly Rate

The cost of dealing with your case on an hourly rate basis will depend on a number of factors such as the complexity of the case, the attitude and responsiveness from the debtor and so on. Broadly speaking, pre-action work can range from anywhere between 5 and 10 hours for routine or less complex matters and for work which becomes litigated, anywhere from 10 hours above. Our hourly rates range from £160-£320 plus VAT depending on the value and complexity of the case.

Issue of County Court Proceedings

Should the Debtor not respond then we will look to issue County Court Proceedings (subject to a pre-issue risk assessment) and will draft the Claim Form & Particulars of Claim.

If we are acting under a deduction-only retainer, we will endeavour to continue doing so. However, should the prospects of success change upon completion of our pre-issue risk assessment then the following fixed-fee amounts apply for this work depending on the size of the debt and what Court track it falls into.

Small Track Debts Fixed Fee (Up to £10,000.00)

*please note the above amounts and % deductions exclude VAT

Fast-track claims £10,000 - £25,000

We will seek to recover our standard costs from the losing party upon successful conclusion of a case. Depending on the retainer entered into we may require a payment on account to start the matter and may raise interim bills throughout the life of the case. Any monies paid on account for legal costs will be offset from the paying party upon successful conclusion of a case.

Multi-track debts £25,000 +

We will seek to recover their standard costs from the losing party upon successful conclusion of a case. However, there will be an hourly rate charge for this work and interim bill(s) will be raised at certain points throughout the life of the case. Any monies paid on account for legal costs will be offset from the paying party upon successful conclusion of a case.

Disbursements

All disbursements are to be funded by the client and we will seek recovery of the same upon successful conclusion of the case. All disbursements paid for in advance and recovered will be paid back to you. These will be for court fees, Barristers’ fees etc.

Example Disbursements:

Tracing Agent Fee approx. £50-£60 + VAT

Process Server Fee approx. £100-£120 + VAT

Court Issue Fee Range from £25-£205 for claim values up to £4999; £455 for claim values between £5000-£9999; For all claims with a value of more than £10000 the issue fee is calculated at 5% of damages, up to a maximum of £10000.

Cost Budget Fee (for Multi Track matters) approx. £500-£1000 + VAT

Court Hearing Fee: £346-£1175

Barrister’s Fee approx. £600-£750 + VAT for Small Track Hearing; £1250-£1750 + VAT for Fast Track Hearing; £2000-£3000 + VAT per day for Multi Track Hearing

Counterclaims

All counterclaims across fast and multi-track will be billed at an hourly rate. We will seek to request the Court to move all small track matters were counterclaims have been raised to the fast track due to complexity.

Set-aside Applications

All set aside applications carry a fee of £500.00 + VAT plus the £255.00 court fee and another related disbursement(s).

Anyone wishing to proceed with a claim should note that:

• The VAT element of our fee cannot be reclaimed from your debtor.
• Interest and compensation may take the debt into a higher banding, with a higher cost.
• The costs quoted above are not for matters where enforcement action, such as the High Court Enforcement Officer (HCEO), is needed to collect your debt.

Our fees include:

• Taking your instructions and reviewing documentation
• Undertaking appropriate searches (except for when it becomes necessary for a third-party tracing agent to be instructed, i.e. because the debtor has moved and cannot be located)
• Sending a letter before action
• Receiving payment and sending onto you, or if the debt is not paid, drafting and issuing the claim
• When Judgment in default in received, write to the other side to request payment
• If payment is not received within 14 days, providing you with advice on next steps and likely costs

It is not possible to give a definitive timescale on how quickly the debt recovery process may take, you know your debtor better than us! However, ordinarily, matters usually take 14 days to 6 weeks from receipt of instructions from you to receipt of payment from the other side. This is on the basis that the other side pays promptly and the debt is not disputed. Where the debt is disputed, or where the debtor simply fails to respond, then the process understandably takes longer and may require additional correspondence and telephone calls to be made before issuing County Court proceedings. If we issue County Court proceedings and we are able to obtain an early Judgment in default, i.e. due to a failure of the debtor to lodge a formal Defence, then we can take enforcement steps. If enforcement action is needed, the matter will take longer to resolve.

Example:

Letter Before Action 14 days

Reminder letter 7 days

Court Proceedings if no response or denial 7 days

Total time from instructions to issuing court proceedings 28 days

If the debtor does lodge a formal Defence and shows an intent to defend the claim to trial, then depending on the Court, the claim may take between 6-18 months from the date of issue.

IMPORTANT

We work is in a streamlined and pro-active manner via our case management system which has a diary-based task-list to ensure an effective and expedient way to recover monies owed to clients:

• We review the initial documentation, such as invoices, any written contracts, purchase orders etc as well as any communications relating to the debt;
• We will perform due-diligence on the debtor to determine whether they are capable of payment (as this may well determine our advices as to how far to take the claim). This forms part of our case risk assessment for prospects and strategy for recovery;
• We will then provide the client with funding options;
• We open a file and send out the requisite instruction paperwork;
• On receipt of signed instructions, we write to the debtor in our letter before action (‘LBA’), setting out the basis of the claim, amount owed, any entitlement to interest, compensation and recovery costs as well as sanctions for non-payment. We provide 14 days to respond;
• If there is no response after 14 days, then we will send a 7-day reminder letter OR, where we have a contact name and telephone number, will attempt to speak to the point of contact for the debtor or send an email;
• If payment has still not been made, we will then assess the prospects, consider any arguments made by the debtor and then determine whether court proceedings are necessary;
• Court proceedings could be one of either: Part 7 proceedings in the County Court OR, where the debt is admitted and the value is sufficiently proportionate, issue a Winding-Up Petition at the High Court (after we have served a Statutory Demand).

COURT PROCEEDINGS

The claim value will determine whether the case is handled in the small claims track (up to £10k), Fast Track (>£10k-25k) and Multi-track (>£25k)

A claim handled in the small track will usual reach trial around 6-8 months from the date of issuing Court proceedings; fast track will be around 12 months from issue and multi-track can be around 18-24 months.

For claims which we issue a Winding-Up Petition, we must follow stringent rules to ensure we comply with the process. The Court will then notify The Gazette of the petition which has the effect of alerting other creditors as to the debtor’s position.

FUNDING OPTIONS

As above, we can either act by way of fee payment or by no-win, no-fee.

Fee payment is by way of either hourly rate, capped or fixed-fee.

Hourly rate is self-explanatory, and the time taken will depend on a number of factors in your case. The work we do as lawyers is not merely a standardised or scripted tick-box exercise. A capped hourly rate fee tends to be where we will agree to do a certain amount of work for a capped amount of time, while fixed-fee will be a flat amount for a particular element of work.

No-win, no-fee, tends to be done by way of Damaged-Based Agreement (DBA). We are paid out of any damages recovered at the amount of 15% + VAT. We will also seek to recover any interest, costs and statutory compensation.

If we are unable to recover any damages, there are no costs to pay.

We only handle matters on a ‘no-win, no-fee’ basis for pre-action (before litigation) debt recovery. If we are required to issue court proceedings, we charge a fee which we will look to recover from the debtor. Further details can be found here about these charges

In some circumstances we can act under a Conditional Fee-Agreement (CFA). This is similar to a DBA, but with a CFA, whatever our costs are that we are able to recover, we will then deduct the same amount of costs from the client’s damages. So, for example, if damages are £100k and our costs are £10k, we will enter into a 100% CFA with the client. Therefore, we recover costs from the opponent in the sum of £10k AND costs from the client for the same amount (£10k).

Again, this is a no-win, no-fee arrangement.

For any claim of a proportionate value that we act for under a DBA or CFA, we recommend that you take out a premium of legal expenses insurance to protect your position regarding adverse costs that you may have to pay your opponent should you lose your case. This only tends to arise after Court proceedings have been issued and we would discuss this with you at the appropriate stage. We work with a large insurer which provides legal expenses insurance and can assist you should you wish to take out cover with them or seek your own insurance provider on the market.