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Debt collecting can be a costly business, but if a

17th August 2000, Page 43
17th August 2000
Page 43
Page 43, 17th August 2000 — Debt collecting can be a costly business, but if a
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Which of the following most accurately describes the problem?

customer owes less than f5,0oolo you might be able to recover your money through the small claims court. Wilf Altman explains how.

• IF A CUSTOMER OR SUPPLIER owes you money and refuses to settle, the only solution might be to go to court. For claims up to f5,000 you often hear of the "small claims" court, but what this really means is the special procedure for handling small claims in a county court. The small claims track is designed to be quick, cheap and easy to use.

Provided that a claim is for less than £5,000 it isn't necessary to use a solicitor. If a claim is for more than £5,000 and covers compensation (or damages) it is advisable to consult a solicitor. If a claim is for more than /15,000, for example, it might be advisable to take it to the High Court.

To make a claim in any county court in England and Wales, you have to ask the court for a Form Ni and complete it. The questions relate to details of your claim, its value, who the claimant and defendant are, and so on. Help filling in the form is available from the staff of the court or a Citizens' Advice Bureau. Three photocopies will be necessary— one for you, one for the court and one for the defendant; more if there are several defendants.

You can claim interest on the money the defendant owes you at the rate of 8% a year from the date the money became owed to you, at a daily rate. Ifyou are owed frpoo, for example, the daily rate of inter

est would be 0.00022 X 1,000 = 0.22, or 22p a day.

The fee paid to the court depends on how much you are claiming, but in some cases none is charged. Staff at any county court will give you details.

What happens when a completed claim form has been sent to the county court? The court will post a copy of the claim form to the defendant, together with an admission form, a defence form and an acknowledgement of service. The defendant can then choose to do nothing, admit all or part of your claim, or dispute all or part of your claim.

Statements

In practice, many cases are undefended. But if a claim is defended it will take time to prepare your case, such as by obtaining all relevant documents or copies and taking statements from witnesses, plus going to a court hearing. In a disputed case when a claim is for less than £5,000, it might be advisable to seek the advice of a solicitor, or it may be necessary to take someone to the court to speak on your behalf You could face a situation where the defendant, a limited company, has no assets in its own name, or your smaller customer has no money or assets or anything else of value. You might still get a judgment, but it's going to be difficult to get payment, especially if there are already other county court judgments against your customer.

If the judgment orders your customer to pay direct to you, this means you will know quickly whether you are going to be paid or whether you will need to consider further action, that is, enforcement, to get your money. The court can then take steps to enforce a debt on your instructions—but you should act quickly.

Deciding whether to enforce a judgment might depend on whether the customer has admitted the claim and made an offer to pay before the judgment or if enforcement is likely to be worthwhile.

If the customer is a limited company and you know the name of one of the directors, you can find out about the company's assets by asking for an oral examination of the director or a search of the Register (Registry Trust) might help you to decide whether enforcing the judgment is likely to be worthwhile. If you do decide to go to court: • find out as much as possible about your customer before you take court action; • find out about court procedures and your responsibilities; • consider carefully whether you can afford the time and expense; • act quickly.

If you do go to court and the defendant doesn't pay, you can ask the court to take further action, which is called "enforcing the judgment". But the court will not do anything unless you ask it to, and there may be a fee involved, though this will be added to the money the defendant already owes you.

Small firms now have another weapon at their disposal, with legislative backing rather than recourse to the courts. Dun & Bradstreet estimates that 25% of the 40,000 annual business failures in Britain are caused by delays in payment.

A growing number of small businesses already use the late payment legislation introduced by the government in 1998 to curb unfair practices. The Late Payment of Commercial Debts Act allows businesses with fewer than 50 employees to claim interest at 8% above the Bank of England base rate on late payments. Where no credit period can be agreed, suppliers can begin charging after 30 days.

The threat of the new legislation appears to be rattling companies which habitually pay late. In many cases firms do not actually need to enforce the legislation, which is there as a credible threat. A growing number of small businesses appear to be putting aside fears of damaging relations with big customers to demand interest payments on overdue bills.


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