Debt Recovery Glossary

Letter before action

Sometimes called a “seven day letter”, “demand letter” or “LBA”, this is a letter sent by us to your debtor requesting payment – usually within seven days (but can be more or less).

The letter includes that if payment is not paid, then legal action will be issued and the debtor would be responsible for court fees and costs and any applicable interest.

Whilst the letter it is not a legal requirement, courts may penalise companies for costs where a letter has not been sent. Additionally the success rate on these letters is around 86%.

Issuing a claim

This is the issuing of the court proceedings where your debtor has not paid. There are two ways of issuing court action:

By way of a local county court (we use Banbury).

The documentation is prepared by the court staff and then sent to the debtor. The disadvantage is that depending on the staffing levels and backlogs at the court, the claim may take a few days to be issued.

By the Claims Production Centre (CPC) in Northampton.

The benefits of this are:

• It’s an online service
• If the claim is with them by 10am, it will be issued that day
• There is a saving on the court fee of up to £80.00

Acknowledgement of Service

This is a document sent to the debtor with the claim form by the court. If your debtor intends to dispute your claim they complete this form, and have a further 14 days to file a defence.

Defence

This is where your debtor disputed your claim, and completes a document outlining why they are refusing to pay.

Enclosed with the claim form is a standard defence form that can be completed, or a formal document can be lodged at court (usually via a solicitor).

Where a defence is filed the matter is usually determined at a court hearing.

Judgment

This is the court’s confirmation your debtor owes you the money you are claiming. There are two ways of obtaining judgment:

Judgment by default

This is by far the most common way. We can apply to the court to have judgment entered if your debtor:

• Fails to respond to the claim form
• Does not file a defence after they have filed an Acknowledgement of service

At a court hearing when a defence has been filed

The judge hears the evidence from both parties and then makes the judgment if he accepts that the money is due

What is enforcement?

This is the type of action taken on your behalf to recover the monies awarded to you under a judgment.

The various enforcement options are:

County Court Warrant

This is where the court bailiff will visit your debtor to request payment. If this is not forthcoming, then they can recover goods to discharge your claim.

Writ of Fi-Fa

Similar to the county Court warrant, but is:

• Issued in the High Court
• Dealt with by High Court Enforcement Officers who are self employed (as opposed to court employees)

Attachment of Earnings

This is where we make an application to the court to have a sum deducted at source from your debtor’s salary to discharge the debt.

Third party debt order

This is where we make an application to the court to have a sum owed to your debtor by a third party to be paid to you.

Charging Order

This is where we make an application to the court to have the amount of your judgment secured on property owed by your debtor.