Debt recovery case study: Hastings & Co Solicitors recover £56,000 for building contractor

We recently acted for a building contractor that was owed in the region £56,000 by a major house builder.

Upon being instructed we issued legal proceedings and managed to recover the full face value of the debt together with sufficient compensation and interest to cover our charges.

Hastings & Co Solicitors are experts in debt recovery. If you are owed money, whether you are a business or a private individual, telephone 01245 835 305 without any obligation.

 

Debt collection: Hastings & Co recover £20,000 for building subcontractor

We recently acted for a subcontractor that was owed in the region £20,000 by a major building contractor. There were various unpaid invoices going back 12-18 months.

Upon being instructed we immediately issued a claim in the County Court. We did not need to send a warning letter as the debtor had already had sufficient warning. Within 28 days our client was in receipt of a cheque that was sufficient to cover the full value of the debt. together with late payment interest at the rate of 8.5% per annum. In addition, we recovered the court fee and sufficient compensation pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 to cover our costs.

Hastings and Co Solicitors specialise in debt collection and litigation. Call 01245 835 305 for a consultation without any obligation.

Debt collection: making a statutory demand

For a company or individual that is owed more than £750 a statutory demand can be a useful tool to put pressure on the debtor.

A statutory demand has to be made on the correct form and then served on the debtor. If the creditor wishes to rely on the statutory demand in a subsequent bankruptcy or winding up petition then the creditor will require proof that the statutory demand was served on the debtor.

Once served with a statutory demand the debtor has 18 days to either (a) settle the debt, or (b) reach an agreement with the creditor or (c) in the case of individuals apply to the court to dismiss the statutory demand (the rules are different for companies).

If the debtor still has not paid by 21 days then the creditor can apply to the court for a petition to wind up (in the case of a company) or make bankrupt (in the case of individual).

When is not appropriate to serve a statutory demand?

I acted for a homeowner recently in connection with a building dispute. The facts briefly are that my client had engaged a builder to carry out building works on his property. The builder then subcontracted some of the work to another building company. As you would expect my client paid the contract price to the main building contractor. Unfortunately, the main building contractor did not pay his subcontractor who was left out of pocket. Thinking that my client was a better prospect of getting paid that the main contractor the subcontractor demanded payment from my client. As you would expect, we pointed out to the subcontractor that he had no contractual relationship with my client and that his claim was against the main building contractor. Not satisfied with this the subcontractor served a statutory demand on my client. That proved very costly for the subcontractor as we applied to the court to have the statutory demand dismissed and the subcontractor ended up paying my client’s costs. The moral of the story there is that it is not appropriate to serve a statutory demand in circumstances where the debt is disputed.

Liam Hastings  specialises in debt collection and litigation. For further advice or assistance please telephone 01245 835 305.

Disclaimer: this blog only gives a brief overview of the law and is not intended as a substitute for legal advice.

Credit control – assessing the risk

Whenever we are asked by one of our clients to sue either an individual or a business we assess whether that person or business is worth suing. As they say, “there’s no point suing a man of straw”. At the end of the day, the client decides whether to proceed or not with litigation, however, we make sure that the client understands the risks involved.

The assessment which we undertake is the type of assessment which individuals and businesses should undertake when deciding whether to give their customers credit and how much credit to give.

We ask the following questions:-

1. Who exactly are we dealing with? ie are we dealing with an individual or a limited company.

2. Do they own any assets?

3. How long have they been trading?

The following online resources are either free or relatively cheap:-

  • In the case of individuals we check the Individual Insolvency Register to see whether the person has been made bankrupt or some other form of insolvency.
  • In the case of companies we check Companies House as this will tell us the address of their registered office, how long they have traded and whether they have been filing accounts.
  • The Land Register can be checked to find out who owns a particular piece of land.
  • Nethouse Prices will give you an idea how much properties have been selling for in the same area.
  • For a small charge you can find out whether the individual or company already has any County Court Judgments registered against them.

The more you know about your customer the more informed your decision will be.

Hastings & Co Solicitors are a niche solicitors firm in Chelmsford, Essex that specialise in debt collection and litigation. For advice or assistance please call Liam Hastings on 01245 835 305.

What makes us different from Thomas Higgins

We are aware that many businesses throughout Essex and East Anglia use Thomas Higgins solicitors (based in Merseyside) for their debt collection work.

To be fair, Thomas Higgins are cheap, charging only £2 plus VAT for a letter before action or £5 plus VAT for a late payment demand. By comparison we charge £15 plus VAT for a letter before action (although we do automatically include a demand for late payment compensation). Admittedly we are more expensive than Thomas Higgins however we still feel that we are good value for money.

How does it work in practice? Typically, we will get an email from one of our regular clients which says something like: “can you send one of your letters to the to the following company.” They provide us with the name and address of the company that owes them money together with details of the outstanding invoices including dates and amounts. We then send that company a letter warning them that if the debt is not paid within 7 days, legal proceedings will be commenced. In addition we advise the debtor that they owe our client compensation pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 and we tell them how much they owe. We ask them to send payment directly to our client.

So what happens if the debtor still does not pay? If it becomes necessary to issue legal proceedings Thomas Higgins charge fixed costs for issuing a claim. Our charges are not fixed in the same way however we still offer good value for money and in most cases our charges are less than the compensation and fixed costs that we are able to recover from the debtor. This means that we are often able to recover the full face value of the debt for the client.

However, where we offer real added value is when the debt is disputed and this does make us different from Thomas Higgins. It is our understanding that if the debt is disputed Thomas Higgins then inform the client that they do not handle disputed cases and the client has to find a new solicitor. This can be after legal proceedings have been issued. So legal proceedings have been issued, they are being defended and you now have to find a different solicitor to act for you.

We are happy to deal with disputed cases and have the skill and experience to advise you on the merits of the dispute.

Hastings & Co Solicitors are based in Chelmsford, Essex and specialise in debt collection. For advice or assistance please contact Liam Hastings on 01245 835 305.

Late Payment Legislation

Liam Hastings of Hastings & Co Solicitors based in Chelmsford, Essex looks at recent changes to the late payment legislation.

Background

The Late Payment of Commercial Debts (Interest) Act 1998 came into force in November 1998. It entitled businesses to charge interest on outstanding commercial debts at a generous rate of 8% above the Bank of England base rate.

In August 2002 the Late Payment of Commercial Debts (Interest) Act 1998 was amended by the Late Payment of Commercial Debts Regulations 2002. It was amended so that businesses could claim compensation on outstanding debts in addition to interest at the following rates:-

(a)    for a debt less than £1,000, the sum of £40;

(b)   for a debt of £1,000 or more, but less than £10,000, the sum of £70;

(c)    for a debt of £10,000 or more, the sum of £100.

The Late Payment of Commercial Debts Regulations 2013

The Late Payment of Commercial Debts Regulations 2013 has made minor changes to the Late Payment of Commercial Debts (Interest) Act 1998. The key changes, which came into force on the 16th March 2013,  are as follows:-

(1)    Changes to payment periods – where the purchaser is a public authority and payment terms have been agreed – the payment period cannot exceed 30 days. Where the purchaser is a private sector business and payment terms have been agreed the payment period cannot exceed 60 days unless agreed and provided the payment period is not “grossly unfair” to the supplier.

(2)    Creditors are now entitled to recover any reasonable costs of recovering the debt, over and above the fixed sum compensation.

Comment

We are big fans of the Late Payment of Commercial Debts (Interest) Act 1998. The compensation, together with the fixed costs that we, as solicitors, are able to recover when commencing legal proceedings, mean that we are often able to recover our charges, in addition to the full face value of the debt, in undisputed cases. If the new right to recover reasonable costs, enables us to recover costs in disputed cases below £10,000 (ie the current small claims track limit) where previously we were not able to recover reasonable costs, this will be great news for creditors who are owed money.

Hastings & Co Solicitors specialise in debt collection and litigation. They offer a low cost debt collection service but have the skill and experience if the debt is disputed. Please telephone Liam Hastings on 01245 835 305 for further advice or assistance.

Disclaimer: this blog is intended to give a brief overview of the law and does not substitute for independent legal advice.