If you are owed money, there are several ways you can legally enforce repayment. As a creditor, it’s important to understand the different debt recovery methods available – and how acting quickly can improve your chances of recovering the full amount.
Engaging a Solicitor Early
In some cases, instructing a solicitor from the outset can result in higher net recovery for you. A solicitor can issue formal demands, assess the strength of your claim, and initiate court proceedings if necessary.
A simple letter of demand on a law firm’s letterhead may be enough to show the debtor that you’re serious and encourage them to engage with you.
Time Limits for Recovering Debt
Under the Limitation Act 2010, you generally have six years from the date the debt became payable to start legal action. If this period passes, the debtor may have a valid defence, and you could lose the right to recover the money.
Legal Options for Debt Recovery
If a formal demand does not result in payment, the next step may be to seek judgment against the debtor for the amount due and owing. Your options depend on the amount of the debt and whether it is disputed:
- Disputes Tribunal
If the debt is disputed and the amount is $30,000 or less, you can apply to the Disputes Tribunal. If successful, the Tribunal will issue an order requiring the debtor to pay, possibly with deductions if appropriate.
Note: The Disputes Tribunal does not deal with undisputed debts.
- District Court
For debts up to $350,000, you can apply to the District Court for a judgment. If the amount is higher – or if the matter is complex – it will be heard in the High Court.
If the debtor has no defence, or the debtor does not respond or contest the application, judgment will likely be entered in your favour.
If the debtor is a company and the debt is a due debt that is undisputed, a statutory demand will be appropriate and can serve as a prelude to liquidation proceedings if the debt remains unpaid.
Enforcing a Judgment
Once you have a court judgment, there are several enforcement options available, including:
- Attachment order (deducts repayments from the debtor’s income or benefit)
- Charging order (registered against the debtor’s property)
- Warrant to seize the debtor’s property/sale and possession orders
- Bankruptcy proceedings (if the debtor is an individual)
- Liquidation proceedings (if the debtor is a company)
Need Help Recovering a Debt?
We can assist you at any stage of the debt recovery process – from initial demand letters through to enforcement of court judgments. Contact Harmans today to discuss the most effective strategy for your situation.
