Recovering debt in the UK can have various steps depending on a number of factors. The steps you take can vary depending on whether you are an individual or a business, and who or what you are trying to recover debt from. It can also depend on the exact circumstances. Did you loan money to a friend, a family member, or as a business? Was there a contract or agreement involved? The things you do to recover your money will vary depending on all of these factors.
Being owed money is never pleasant, especially when you have provided a quality service or loaned money to someone close to you out of the goodness of your heart. Knowing the right steps to take will keep the situation under control and hopefully stop you from losing your relationship, whether this is a customer relationship or a close relationship with a friend. If you are finding yourself in situations with this particular customer/family member/friend often, then it could be time to consider whether it’s worth letting the relationship go for your own good.
This educational guide aims to explain as much as possible so you know exactly what to do if you find yourself in this unfortunate situation. You can take as many of these steps as you need to in order to get your money back:
1. Mentally Prepare Yourself For What Could Happen
Before you take any of the other steps in this guide, you need to make sure you mentally prepare yourself for what could happen. You obviously need to be committed to getting your money back, which can be a stressful and lengthy job. You may think that you’re already committed to this cause, but are you really?
You may have to deal with all kinds of excuses from people as to why they cannot pay you. Your approach will ideally be professional, friendly, and firm, especially if you are a business – at least to start out with. Don’t get all serious straight away and start threatening legal action, as there may be a valid reason as to why this person or organisation has not paid you back yet. They may fully intend on paying you back in the near future, and all you have to do is grin and bear the situation for a little longer. While you want your money back ASAP, grinning and bearing the situation could very well save legal meetings and money your end. It could even save your relationship.
If you’re a business trying to get money back, you need to get comfortable about confronting people who refuse to pay. If you really can’t, it could be time to hire somebody who is and delegate that task to them. You don’t want people to feel as if they can start taking liberties with you and your business.
2. Contact The Person Or Organisation
Once you’ve mentally prepared yourself, the obvious step is to contact the person or organisation to find out what’s going on. You can do this many ways. You might want to try sending a reminder letter to begin with, if this is more comfortable for you. The best way to contact is the way you feel makes the most sense, but also a way that you can keep records of if needs be. If you do end up having to take this matter to court, it will help you to have evidence of your correspondence on the matter.
However, it’s time to call the person if you haven’t heard back from your initial contact within 30 days. A phone call may result in an honest conversation with the person telling you what is stopping them from paying you. It’s also much harder to ignore a phone call than an email or al etter. You may be able to informally agree on a solution that suits you both and come off the phone feeling much more positive about the situation, knowing you will get your money.
If the phone calls fail, you may then want to send another, more formal letter. Write a letter and include how much they owe, what it’s for, and what steps you have taken already in an attempt to retrieve the money. Keep the letter formal so that they can see you are serious (remembering this may be shown in court at some point), and remember that it’s so important to include all of the relevant information. Include the names of those involved, paperwork, a date by which you would like to be paid, details of steps to be taken if payment isn’t received, and so on.
As this letter must be professional, don’t get into heated arguments and back and forths with the other person. Don’t include insults or things that will get them riled up on purpose. Don’t threaten with legal action that you won’t go through with either. You don’t want anything to go against you if this case ends up going to court, no matter how upset you may be about it.
You absolutely need to be the bigger person when it comes to contact. Always take the higher ground. You may if the subject has moved address making contact impossible need to locate where the subject has moved by using a professional tracing agency who will be a Tracing agent no trace no fee.
Mediation isn’t for everyone, but it’s an option you can take if you are in a dispute with the person who owes you money. A mediator will act as a sort of referee, helping to hash out the details and come up with a solution that suits you both.
This could be a good idea for friends or family members who owe money but now have bad blood. It’s a shame when this happens, but mediation can avoid crossed wires and arguments and find a solution much quicker than going it alone. If you simply cannot have a calm or grown up conversation with the person who owes you money, find an experienced mediator in your area.
4. Do Your Best To Remain Calm
How valuable is this relationship to you? This is a question worth thinking about, whether the person who owes you money is a customer, friend, or family member. Consider whether you’d like to keep the relationship and what you’d like it to be like after all of this is over. Don’t do things in the heat of the moment. Staying calm will always go in your favour.
You may be able to set up an installment plan that suits the both of you if you manage to be understanding and calm, and providing you are open to that solution. It may not be a good idea to add on interest payments, as it can take even longer to get the money you are owed. Some even agree to take less than they are owed for quick payment. For instance, if you are owed £10,000, you may agree to take £7000. It isn’t ideal, but you are at least recovering some of your money quickly.
5. Contact A Solicitor
It could be a good idea to contact an experienced solicitor in debt recovery if you are still struggling to recover your money. They can write a professional and compelling letter to the person who owes you money. A letter like this can get fast and efficient results, and will usually be worth the cost.
Not only will a solicitor help you to define your case in legal terms, this is a great option for people who don’t seem to be responding to contact from you. A letter like this should at least get a response from them, if not payment right away. You may not scare the person or organisation in debt to you, but a solicitor might.
Bear in mind that some solicitors charge a fixed rate based on their time, or a price per service. Find out which and make sure you do your research to find the best solicitor in this field near you.
6. Make A Court Claim
Making a court claim could be a good option if mediation and everything thereafter fails. Going to court should be one of the last resorts you turn to, as it’s expensive, time consuming, and comes with risk. You can also claim online if owed less than £100,000 and owed by no more than 2 people or organisations. The court will then order the money to be paid back to you. It’s up to you to decide which option is more suitable for your situation.
Bear in mind that it can take months for a case to go to court, and this may not be ideal for you depending on when you need the money. Also, you must remember that there’s no guarantee that you’ll win your case and you may have to pay the other side’s costs too.
It can be difficult to get the money back if the other side are not working or have been declared bankrupt, so consider these eventualities. Are you going to court because you think you will get the result you want, or because you are being petty? If you know the other party will be unable to pay, court action may not be the route to take.
7. Make An Official Demand
It’s always possible to make a statutory demand if you’re owed money from either a person or a business. They might ignore this or say they cannot pay, and in this case the court can make them bankrupt or have a company liquidated. These are serious actions, so again, you’ll need to be sure that the situation calls for this.
The costs are high and the risk remains that you may not get your money back, but if you really want your money, it could be the way to go.
8. Use A Debt Recovery Agency
Using a debt recovery agencyis a last but necessary resort for many people. They can operate a few different ways, depending on the company you choose to work with. Not every agency will be right for your unique business, so you need to make sure you do plenty of research to find the right one.
They may charge a fixed fee or take a percentage of the money once they have recovered what you’re owed. They may even purchase the debt from you and then set out to recover the debt for themselves.
It’s also worth noting that a company like this may use staff who are not legally trained. This could potentially mean distress for the person who owes you money, and might not be the best way to tackle the issue.
There are a few things you must do to find the right agency, if you think it’s a good idea. First, you must do your research. Then, you need to make sure they are a legitimate agency. You may need an agency that specialises in skip tracing, where the person who owes money tries to get out of the debt by leaving the area. If you have been personally contacting this person but have been ignored time and time again, this is important.
You’ll then want to ensure the agency has insurance. The debtor may be able to sue if they feel the company has acted wrongly. Comparing fees and contingency costs is the final step. Knowing and understanding the fees is a must for figuring out what’s right for you.
There are pros and cons to all of the options on the list. Some of them will cost you money, some will take time, and others mean you have to keep your cool no matter what and try to remain as understanding as possible. The option that is right for you will totally depend on your individual situation and how much you’re owed. It’s a good idea to exhaust your own options first, as any option involving another company or service means you will not recover the total amount of money owed.
As being owed money can be time consuming and mentally taxing, you may want to use professional services regardless. Hopefully, you will be able to find a solution that is right for you using this guide.