Business Debt Recovery Solicitors

For qualifying business to business debts, the Late Payment of Commercial Debts (Interest) Act 1998 implies a right to statutory interest at 8% above the Bank of England base rate, fixed compensation on each qualifying invoice, and the reasonable costs of recovering the debt where the fixed sum does not cover them. Contractual interest applies instead where the contract provides a substantial remedy of its own. These additions frequently change a debtor’s arithmetic, because ignoring the invoice is no longer free.

A letter of claim sets out the debt, the basis on which it is owed, the interest and compensation claimed and the deadline for payment, in accordance with the applicable pre action rules. Where the debtor is an individual or sole trader, the Pre Action Protocol for Debt Claims prescribes the information to be provided and gives the debtor time to respond before proceedings. It is required in practice in almost every case, and it is also effective: a properly drafted letter of claim collects a large share of debts without any claim being issued.

A statutory demand is a formal written demand for payment which, if a company fails to satisfy an undisputed debt of £750 or more within 21 days, founds a petition to wind the company up. It is the strongest pressure available against a solvent company that will not pay. It must not be used where the debt is genuinely disputed: the courts restrain petitions founded on disputed debts and penalise the creditor in costs, which is why we test the dispute risk before serving one.

Rarely as a first move, and never as a bluff you are unwilling to carry through. A winding up petition is a collective remedy for all creditors rather than a personal collection tool, it involves real cost, and it is an abuse of process where the debt is genuinely disputed. Its power lies earlier in the sequence: the prospect of a petition, made credible by a properly served statutory demand, is what produces payment. Where a company is genuinely insolvent, we advise honestly on whether anything is recoverable at all.

The matter becomes a contract dispute and the strategy changes: insolvency pressure comes off the table and the merits move to the centre. The dispute is tested against the contract, the delivery records and the correspondence, and resolved through the same escalation as any contract claim, from negotiation and mediation to proceedings. Tactical disputes tend to collapse when the documents are assembled properly, which is why the file matters more than the argument.

Enforcement is chosen to fit the debtor’s assets. A writ of control sends High Court enforcement officers to take control of goods, a charging order secures the judgment against the debtor’s land and can lead to an order for sale, a third party debt order intercepts money in the debtor’s bank account, and against individuals an attachment of earnings deducts from salary. The court can also order a debtor to attend and answer questions about their means on oath. The right sequence depends on what the debtor has, which we investigate first.

We quote fixed fees for every stage, agreed before any work starts, at prices around 30% cheaper than a standard law firm, and on qualifying commercial debts the statutory regime and most well drafted contracts pass recovery costs to the debtor. Whether pursuit is worth it depends on the debtor’s ability to pay, which is why the first step is an assessment of the debtor, not the issue of a claim. We tell you honestly when writing a debt off is the better commercial decision.