A review of debt recovery procedure in light of changes in the economic climate and the court system

In the past…

A responsible individual or company seeking to recover overdue monies, would no doubt, be minded to instruct a local firm of solicitors with a good Debt Recovery reputation. As we will see below, there is no reason for this to have changed.

Clients naturally want to recover the sums due to them in a timely fashion and if possible, with as little outlay as possible. However is this still possible bearing in mind the economic climate and the change to the way claims are issued?

In the past once a debt recovery instruction was received, the procedure would be;

  • input instruction on case management system
  • letter before claim sent to debtor
  • if no response received, issue court proceedings

The claim form would be drafted and sent to the local court and if a last minute payment was made by the debtor later that day or the following morning, a quick call to the court would usually stop the claim being issued. If proceedings were issued, the Defendant may make contact to discuss the matter further or if no contact was made, judgment would be entered in default.

A suitable enforcement option would then be recommended and put into action and sometimes multiple enforcement methods would be used over time, if necessary.

Know your debtor

In the currently economic climate, debtors are less able to pay and on top of this, changes to the court system are causing delays with the claims procedure. Every debt recovery seminar or course will start with the phrase “manage your client’s expectations”. This is of paramount importance as we do not wish it to appear as though they are spending good money after bad with the possibility of no return.

To live up to our clients high expectations we must ensure we have been provided with as much information as possible in respect of the debt. As well as the usual information such as name, address and debt amount, further information is valuable.

Such information can include; has contact been made with the debtor in respect of the sums due? Is the relationship a long standing one? Do they have any information in respect of the debtors circumstances?

Getting started

The first step and maybe now the most important one is to prepare a clear, concise, informative letter before claim setting out clearly the information required under the Civil Procedure Rules. Getting a response to this letter is crucial to ascertain the debtors attitude to the debt and any information gleaned will assist us provide the client with suggestions as how best to proceed.

The issue of court proceedings is no longer dealt with at the local court with all claims being sent to Salford Business Centre.  At time of writing, Salford Business Centre is causing delays with the issue of claims and judgment orders. Upon calling the centre for updates or clarification, the staff do not appear to have any further information.

For us this is frustrating, however we must ensure our clients are aware of these problems should we encounter them and trust they will bear with us. The Civil Court Users Association is actively seeking improvement in the service and things can only get better with their involvement and input.

One of the main causes of upset for a creditor is, having obtained judgment, finding their choice of enforcement has not been successful despite them having spent more money.  Although some clients continue with action, regardless of whether or not the sums will be recovered, most clients want (and often need) to have the debt paid.


The Ministry of Justice, Court Statistics for the first quarter of 2012 show that 10% fewer cases were issued than in the first quarter of 2011. This continues the downward trend from the peak in 2006. Enforcement has also decreased by 10% on the same period the previous year and they note the number is half the applications received in the first quarter of 2008.

In conclusion

In conclusion it would appear that the old debt recovery adages are still true namely ‘manage your clients expectations’ and ‘know your debtor’. Expectations are high from our Clients, therefore we must work closely with them so they may help us to help them. Debt Recovery actions are always most successful when action is taken swiftly and we can pre-empt any potential problems.

Also, as the statistics show fewer claims are being issued, a more effective letter before claim and the right level of experience in negotiations may ensure that a claim is now really only issued as a last resort.

Author – Christine Power is a Chartered Legal Executive who specialises in debt recovery.