‘Cash is king’ is a commonly used expression, but one of vital importance to all businesses for financial viability and success. Pursuing unpaid debts can be both frustrating and time-consuming. If your business is suffering as a result of unpaid debts, it may be time to take action.
Debt recovery need not be difficult or cost-prohibitive, and our team of specialist debt recovery litigation solicitors are here to help. We fully understand the impact that late payment of debt can have on you or your business. We will seek to recover the maximum amount owed to you in the most cost and time-effective fashion, including any interest or expenses that you may also be able to recover.
Contacting us does not mean that we will rush into court. We can talk you through the steps that can be considered before litigation. However, if you have tried to settle an unpaid debt without success, there comes a time when you must consider the pros and cons of proceeding with litigation, otherwise, you will go unpaid. It is an unfortunate fact that there are often few other means of getting your debtors to pay back the money owed to you other than a court order. We can advise you when litigation has good prospects, not only of obtaining a court decree, but also of getting the money back from the debtor. We will always have an eye on commerciality and financial viability and will advise you accordingly.
Where a debt is disputed by the debtor, litigation can assist in “narrowing down” the issues and we will always try to obtain an interim order for payment of any aspect of a debt which is not disputed.
We act for all kinds of businesses and individuals all across Scotland, and cover most types of debt recovery including:
In some cases, sending a demand letter indicating that litigation will take place if payment is not made is enough, and we have feedback from clients of an 80% success rate further to the issuing of a demand letter.
We will explain your options to you clearly and concisely to ensure you fully understand how your case will progress, and the timescales and costs.
In litigated cases, our solicitors will raise an action on your behalf in the Scottish courts. Your action will normally be raised in a Sheriff court, unless it is for six figures or more, or the background is complex, in which case we can consider the Court of Session in Edinburgh, which is the highest forum in Scotland for civil recovery.
We may also consider raising an action through the Sheriff Court Commercial Courts which are available in several jurisdictions for “commercial actions” and which allocate a Commercial Sheriff to oversee the case from beginning to end. There are a number of advantages to running a case in the Commercial Court such as flexibility, the Sheriff’s expertise and knowledge of the case, timescale and cost advantages, as the procedural hearings are usually dealt with by way of telephone conference, documents are accepted electronically and pleadings are generally more relaxed.
The definition of a “commercial action” is broad, so a wide range of debt recovery cases will fall into this category.
For lower value debts of £5,000 or under, they will follow the Simple Procedure process also through the Sheriff Courts. The Simple Procedure process was set up to allow a fast, effective and inexpensive way for smaller debts to be recovered, but the rules and procedure can be tricky to navigate for the uninitiated!
In some circumstances, interim protective measures may be required in order to protect your debt against assets, money or property belonging to the debtor. This may including asking the court to freeze the debtor’s bank account or asking the court to prevent the debtor selling their house or land until they have repaid the debt owed to you.
The type of court action raised will depend on your specific circumstances and the action required will depend on the sum due to you by the debtor.
The Late Payment of Commercial Debt Regulations gives businesses a right to re-claim interest and charges on late payment of a commercial debt. The amount of interest is set at 8% above the base rate and you are entitled to claim a reasonable administration fee for chasing the late payment. Interest owed to you will from 30 days after the due date of payment. The due date for payment is determined by either the date goods or services were delivered to the debtor or the date on which notice (such as an invoice) was given to the purchaser, whichever is later.
In addition, if a court action is raised, you are entitled to claim judicial interest on the sum sued for which runs at 8%, usually from the date raising the action.
In order to make matters commercially attractive to clients, our charges in sending out Demand Letters and Pre-Litigation letters can vary from £75 + VAT to £200 + VAT, depending on the level of debt.
We are pleased to be able to offer a fixed fee for raising court proceedings as follows:
In particularly complex cases or cases with a high volume of papers, we may require to charge a further £200 + VAT for review, but we would notify you in advance if we considered this was a necessary cost.
This will take the case to the point of the action being raised and served and a Defence stated. If no Defence is stated, decree (judgement) will be granted at that stage [see Enforcement below]
If the action is Defended, the court will allocate a procedural hearing and parties will be allowed a period of time to adjust their pleadings and we will consider whether any interim orders are required. The costs to take the case to a procedural hearing is an additional £400 + VAT for Ordinary (Options Hearing) or Commercial cases and £200 + VAT for Simple Procedure (Case Management Hearing).
The costs to take the case to a procedural hearing is an additional £400 + VAT for Ordinary (Options Hearing) or Commercial cases and £250 + VAT for Simple Procedure (Case Management Hearing). Additional charges may apply where we have to attend the hearing and travel or attendance exceeds an hour. We will discuss that with you in advance.
If an evidential hearing is required, we would provide a detailed estimate of costs to prepare the case and conduct the hearing.
After you have been successful in litigation, the Court will issue a decree. The general rule is that expenses follow success, so hopefully you should have a decree for the sum due plus interest and judicial expenses. As a general rule of thumb, judicial expenses should cover most of your legal fees (usually around 70 – 80%). We can advise on enforcing a decree and recovering payment of your debt. Enforcement can require several methods of what is known as ‘diligence’ – a legal term used in Scotland to describe methods used to enforce a court order. Diligence usually starts with serving a charge for payment on the paying party. A charge for payment is a formal demand and requires to be served by Sheriff Officers. The charge for payment is a fourteen-day notice to the debtor to make payment. If the debtor fails to make payment to you, then you can proceed with further action. This can include earnings or bank arrestment, Inhibition of property or a Petition for Sequestration or the Winding-Up of a company.
We also appreciate that it will sometimes be our client who is being chased for a debt. We can give advice on protective measures that can be taken if a creditor comes knocking and we can also help in negotiating settlement and ensuring that no prejudicial action is taken which may result in a decree passing, interim arrestment or diligence being carried out before you know about it or a credit score being unnecessarily effected. If you are sued, we can advise on tactical measures such as the lodging of a Minute of Tender which is a formal offer to settle a claim and which has consequences for the award of any judicial expenses.
We would always encourage the consideration of ADR (Alternative Dispute Resolution) including Mediation and Arbitration for the recovery of particular types of debts, particularly complex contractual, building or construction disputes, and we are able to talk you through the pro’s, cons, cost implications and potential benefit of each.
Our litigation lawyers helps resolve a broad range of disputes with skilful negotiation and straightforward, clear advice. Where court action is required, we are pro-active and determined in our approach to securing fast, effective solutions. We foster close working relationships and respond to our clients' individual needs, whether that is about a simple debt recovery matter or a technically complex and high-value dispute. Contact us on 0141 473 6784 or fill in our online contact form.