Debt Recovery Law
The legal approach to recovering debts
If you operate your own business, situations in which your clients fail to pay the money owed to you can cause serious cashflow issues. Even for those not in business, unpaid debts can be the cause of financial woe, with individuals or businesses breaching a good-faith agreement to pay you what you are owed.
Fortunately, the law is on the side of those who are struggling to secure payment from errant debtors, and you can therefore bring it to bear when needed.
Dealing with late payments
When operating a business, it is inevitable that, at one point or another, a customer will fail to pay their debts as they fall due. While this does not necessitate extreme action, it’s useful to know what you can do about late payments, both to discourage them in future and to cover any losses you may have incurred due to the lack of timely recompense.
If the debtor in question fails to pay up, there are debt recovery procedures available for attempting to secure the money you are owed that will not necessitate going to court. Statutory demands in particular are an absolutely vital part of your toolbox when it comes to making it clear that you will not tolerate a failure to repay money owed to you.
Recovering debt through court action
While it is a last resort, significant sums of debt owed by particularly intransigent debtors may force your hand and require you to take them to court to recover the money. There are many procedures and processes in place which will enable you to do this, but before taking a debtor to court, it is important to consider whether or not it is worth it – if the debt is small or they are genuinely unable to pay, you may find that it costs you more than it is worth.
Share your experiences
Please note: The views expressed in community areas of this site do not necessarily reflect or represent the views of Law on the Web, its owners, its staff or contributors.
According to debt recovery law, "bad debts" refers to any debts which business or lender will be unable to recover from its customers.Find out more
Debt collecting agencies are usually considered to be something of a last resort for those creditors who are owed money by their customers.Find out more
A statutory demand is a written formal request, sent out on request by the owed creditor, for the debt to be paid, using one of many different methods.Find out more