Now what - debtor will not pay

geoffb · Jan 1, 2010

OK - advice please....

I have an ex customer who won't pay 3 invoices - the debt collection agency has been on to him since august, the debt was originally for £1200 which is now upto £1600 with costs and interest.

He has had a stat demand issued to him via a process server, and he has totally ignored that.

The 21 days notice that the stat demand gives has now expired.

This **** (sorry but really angry) has never had any intention of paying.

Where do I go from here....

He lives with his girlfriend - so doesnt own property, don't know if he owns a car or not, hes a sole trader, so don't know what assests he has, he doesnt have any ccjs against his name, or the sole trader business that we can find.

If I go for bankruptcy it will cost me even more money he might even be hoping I do this - and I might acheive nothing.

Or do I take him to court - cheaper - but at least I will guarentee a CCJ against him, as I have a bounced cheque for £850, just to get the pleasure of it, and maybe get back £1 per week, which is more than I might get otherwise.

What would you do in this situation,
Any Advice

Thanks

GB

deadgoodundies · Jan 1, 2010

I think court is your next step against him.
But first fill in the paperwork and then either fax, email or post a copy of it to him and say if you don't pay this is going to court now.

Surprising how many people pay up when they have the paperwork that is going to get filed in front of them

Mpg · Jan 1, 2010

Go to court. Moneyclaim online itll only take 10 mins.

Its about £70 I'm in court on monday and the defendent has paid into court(under duress from his partner who doesnt know the full story) and It should be a walk in the park for me, even if he actually turns up.

After he's paid me what he owes I'm then going to issue another claim for the next years amount I'll never get it but its worth £70 to give him more headaches and another ear bashing from his business partner and his wife.

LicensedToTrade · Jan 1, 2010

The first thing you need to do (and possibly the hardest) is remove this incredible amount of emotion you have put into this. This is purely business, keep it that way or you can cause more problems for yourself.

Or do I take him to court - cheaper - but at least I will guarentee a CCJ against him, as I have a bounced cheque for £850, just to get the pleasure of it, and maybe get back £1 per week, which is more than I might get otherwise.

You don't take people to court for pleasure, you take people to court for two reasons, to recover money owed to your business or as a deterrent to other clients who may have similar ideas about not paying you.

If you cannot achieve either of these goals then you don't take people to court. You write it off as a bad experience and focus on bringing in the next customer.

Hope you get your money back, it is never nice dealing with these problems. I had a well known customer who was abuilding contractor go bust last year owing us almost £500,000. They went into administration and were bought over by a larger company who did not take on their debts. The bitter sweet reality now is that we lost all of that money and yet we are now continuing to trade with the company under its new ownership...strange one eh? Thank god for credit insurance.

Anthony Reeves · Jan 1, 2010

Yes, issuing a court claim is the next action.
In my view, I would have not bothered with a "debt collection agency". I would have sent a "letter before action" in August to comply with the court pre-action protocols and then issued proceedings.
Bear in mind that enforcement of a Judgment is going to be the difficult part of the process. As to a possible means of enforcement, consider a third party debt order. The bank account may not/or may not have funds in it depending on the timing of an application, but if he is in business then discover who owes him money and go for a third party debt order against those who owe him money, so that they pay directly to you the more they owe him.

Anthony Reeves
Pinniger Finch & Co, Solicitors

seanstevens · Jan 2, 2010

If he does not own a home and you don't know what funds he had then the stat demand was not really worth the wait of 21 days. You should go the direct route to the court process, get your judgement and then get it enforced. As mentioned above a debt order may be the best option for you.

If you PM me your email address I can send you a PDF of the court options.

Sena

termsandconditions · Jan 4, 2010

Sorry to learn of the problems you have faced with your debtor. I agree with some of the other posters in this thread that court action and enforcement is the logical sequence to pursue. I know a couple of great litigation lawyers that are fast and won't charge the earth if you send me your e-mail.

I appreciate that my next recommendation is analogous to closing the stable door after the horse has bolted. However, I would also recommend that you review your current credit management procedures and terms of trade. We see so many out-of-date terms which don't do our clients any favours when they are pursuing debtors. Updating your terms from a credit management perspective and introduce a simple procedure will reduce your exposure to delinquent debtors.

Best Regards
John Hackwood
EC Credit Control

Jan 4, 2010

Why, oh, why oh why?!?!? Did you issue a Stat Demand?!?!?!?!? Who advised you to do that?!?!?!

To make someone bankrupt will cost you around £1000 so add that to your debt and you will have in effect increased your debt to £2600. As you said he doesn't have any property so what will he loose?

Bad advice if you ask me.

A CCJ sounds like the only viable option for you although if he's ignored the Stat Demand then he probably won't reply to the court papers BUT you would then have one issued by default. Once the CCJ is issued the options are baliffs (you have to pay for a Warrant of Execution) Attachment of Earnings is no good as he's self-employed.

Steve Thornbury · Jan 5, 2010

lucy*tenable said:
Why, oh, why oh why?!?!? Did you issue a Stat Demand?!?!?!?!? Who advised you to do that?!?!?!

To make someone bankrupt will cost you around £1000 so add that to your debt and you will have in effect increased your debt to £2600. As you said he doesn't have any property so what will he loose?

Bad advice if you ask me.

Yep! Hindsight is a wonderful thing!

My advice Leave it alone Its obviously got to you, he's never gonna pay for various reasons, he's never going to be compliant with the courts rulings etc he's a waste of your time and effort.

Sorry!

geoffb · Jan 5, 2010

Why, oh, why oh why?!?!? Did you issue a Stat Demand?!?!?!?!? Who advised you to do that?!?!?!

many people actually ----

everyone kept telling me that a stat demand *should* get a result, as many debtors will usually act on it.

I actually got the stat demand issued via a process server for £75 - it was a last ditch attempt, unfortunatly it didnt work, but for £75 I thought it would have a decent chance of getting a result.

The problem, now if this guy has ignored everything - and has no intention of ever paying.
Lots of people tell me that people like him know how to work the courts - will play the system, pay £1 a week for a month then default.

Im just worried about his customers, and if he is conning them as well

Mpg · Jan 5, 2010

Can you re-represent the cheque at a time when he may have cash in the bank. Or is that a no no with cheques.

Another question is can you afford to lose the money. Is £1600 a big deal.

The reason for asking is it still may be worth spending £70 on trying to get a CCJ so YOU can learn a bit more about how to play the system for the next time this may happen.

Ive just won a case where I hadnt had the money (admittedly i wasnt really out of pocket either) but in the end turned into another life experience. I won so all's good but had i lost at least i would have learnt how to play the system so I had a beter chance of winning next time.

Like most things in business DON'T take it personally.

A friend of mine has a signwriting company who hasnt been paid out for a sign done for a Bar for over 12 months despite many letters and phone calls so jumped up a ladder Xmas eve and removed it.

Without the sign the place looked closed down. Didnt get her money but now she takes a bigger deposit for her work. And enjoyed the payback.

geoffb · Jan 5, 2010

Hi
yes, I can afford the money - obviously im not happy about it - as its a nice holiday for our family, but our business wont close because of it.

The whole situation has been a learning curve, not only finding out how useless courts and the law is to actually help small buisnesses, but how easy it is for people to run up debts with no intention of repaying, and how 'debt isn't a crime' which yes I understand when people are made redundant - or get into arrears when totally beyond their control, but to buy stock with a rubber cheque, and have no intention ever of repaying isnt debt to me its theft !

The soletrade doesn't have any CCjs against him, so yes, I am thinking about the court, to get that CCJ, so at least it might warn other companies about giving him credit

Jan 6, 2010

I cannot believe that ANYONE in the industry would advise you to issue a Stat Demand as a first line of action, especially as he has no large assets. What a complete waste of £75!!!!!!!!!!!!!!

It is really frustrating to me how many cowboys are giving rubbish advice and giving the industry a bad name!!!

I think you are right to go down the CCJ route just don't get any ideas that you will get your money, if he has ignored an official Stat Demand then a CCJ won't bother him!! If he lives at his girlfriends then he will just say he doesn't own anything so no point in wasting money getting a Warrant of Execution. Just use it as a warning to everyone else and at least you've ruined his chances of getting any credit or a mortgage!

maxine · Jan 6, 2010

Stat demand is madness. Was it someone in the debt recovery industry that suggested that or was it friends, family, business associates?

Anyway, I would agree with everyone else on CCJ + appropriate methods of enforcement, and possibly consider an Order to obtain information (after CCJ but before enforcement) to help decide on the most appropriate method of enforcement. At least that will show whether 3rd party debt order is worth considering, and it also helps to get an idea of what payment arrangments might be, etc.

Also, what is the nature of the debt, what service/product is it for out of interest and can you not put things in place so that you don't give a sole trader £1200 worth of credit in one go in future?

Good luck

Jan 6, 2010

maxine said:
Stat demand is madness. Was it someone in the debt recovery industry that suggested that or was it friends, family, business associates?

It'll have probably been a friend of a friend. It always is! I must hear that at least 5 times a week "well XXXXX went through this exact same situation and thats what they did".

It's almost on a par with someone selling there car for £1 before a bankruptcy hearing!

(which was also advice given by a friend of a friend of one of our clients)

internetspaceships · Jan 7, 2010

LicensedToTrade said:
The first thing you need to do (and possibly the hardest) is remove this incredible amount of emotion you have put into this. This is purely business, keep it that way or you can cause more problems for yourself.

You don't take people to court for pleasure, you take people to court for two reasons, to recover money owed to your business or as a deterrent to other clients who may have similar ideas about not paying you.

If you cannot achieve either of these goals then you don't take people to court. You write it off as a bad experience and focus on bringing in the next customer.

Hope you get your money back, it is never nice dealing with these problems. I had a well known customer who was abuilding contractor go bust last year owing us almost £500,000. They went into administration and were bought over by a larger company who did not take on their debts. The bitter sweet reality now is that we lost all of that money and yet we are now continuing to trade with the company under its new ownership...strange one eh? Thank god for credit insurance.

May I say that this is one of the best posts I have read on this forum. I take my hat off to you sir.

We too use credit insurance by the way it's an amazing product.

Could I suggest that since many of the questions and threads in this part of the forum seem to have the same theme, namely debt collection and Company Law/shareholdings that maybe it's time to make a thread with appropriate links in it, possible routes to solution, and "sticky" the damned thing so we can point people at the relevant list of resource and not need to cover the sasme ground time after time?

I appreciate that everyones needs are indivudual but most of them come down to the same "nuts and bolts" from which a battle plan can be drawn.

My two cents for the OP, remove all emotion from it. If he gets under your skin then he has won, whether you recover your money or not. It's business so don't let it intrude in your other dealings.

Regards

Jon

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