Step-by-step guide to form SD4
Step-by-step guide to form SD2
Before entering into an agreement with a client or customer and agreeing payment terms with them, there are various steps that you can take if you want to avoid problems with non-payment later on. What is best for you will largely depend on the nature of the agreement and the relative importance of each customer or client to your business. The greater their importance to your business's cash flow, the more vigilant you should be, but remember that simply because your prospective client has the ability to pay you on time does not necessarily mean that they will in practice. Consider the following:
Establish systems and procedures for collecting payments
Good practice is essential to stop late payments before they become a problem and allow you to easily track how much you are owed. See Q&A 2 for the kind of simple steps that can benefit your business.
Check the financial health of new clients
If you do not do this already, you can build a few simple checks into your client A detailed investigation of a business, or aspects of a business, relevant to negotiations between parties, which is carried out by one or more parties to the discussions before legally committing themselves to a transaction or contractto help you spot issues before they arise. See Q&A 3 and following.
Check clients' payment practices
Even financially healthy clients can have a history of poor payment practices. See Q&A 5 and following for how you can identify some of them.
When establishing or reviewing your payment practices and procedures, consider some or all of the following (not all of these will be suitable for all businesses):
a cash management system to keep track of what you are owed and giving prompt and regular invoices to ensure that there is no delay or uncertainty about what is owed to you and when (there are several software solutions for this);
state the payment due date clearly on your invoices, including any relevant credit period (see VAT invoicing for guidance on what other information should be included on your invoices and Non-VAT invoice or VAT invoice for templates);
ask for a deposit or some other payment to be made up front to reduce the burden of late payment (particularly in respect of large or long-term contracts);
adapt your pricing model to one less open to non-payment abuse (eg pricing on a retainer basis);
offer rewards in your terms and conditions for early payment (eg discounts) or punish late payment (eg by charging interest – see Q&A 7 and following for more information about charging interest on late payments);
request a (1) In the context of debt, a contract where someone agrees to pay if the debtor cannot pay themselves. (2) In the context of sale of goods, a promise to a customer which is given freely (without charging extra money) that the goods they are buying will meet certain standards, and if they do not the person making the promise will do something to make up for that (eg give a refund, or repair or replace the goods). from a more established A larger company which has control over a smaller, subsidiary company, usually because it holds the majority of voting rights in the subsidiary company. if you find that you are dealing with a shell A private company limited by shares incorporated and registered in England and Wales. or a A private company limited by shares incorporated and registered in England and Wales. with limited assets;
ensure that you know your bottom line and how flexible you are willing to be without endangering your business, and consider at what point it would be appropriate and proportionate for you to escalate your debt recovery action if payment is not made;
look out for warning signs and stay aware of changes in your client's business which could affect its ability to pay you (eg they are beginning to pay later and later, or they are becoming more difficult to contact regarding payment); and/or
consider entering into (In finance) A financier, also known as a factor, provides money to a business by buying the business's outstanding invoices. The amount made available by the factor will equal most of the amount owed under the invoices, the balance being made available when the invoices have been paid. Unlike with invoice discounting, the factor will manage the invoices and collect the debts directly from the business's customers. or A financier provides money to a business by buying the business's outstanding invoices. The amount made available will equal most of the amount owed under the invoices, the balance being made available when the invoices have been paid. Unlike with factoring, the business will keep control over the collection of its invoices. arrangements if you need to raise money against your invoices before they have been paid (see Q&A 23 for more information).
It is important to keep these systems and procedures under review and adapt them to different customers or clients if you have identified a risk of non-payment.
Remember that when you are storing your clients' or customers' financial information, you need to ensure that you comply with your The area of law which deals with the way in which data can be handled. obligations. See The rules about storing data for how to comply with the law when storing customer data.
If a prospective client or customer is a A private company limited by shares incorporated and registered in England and Wales. , you can check its Companies House register entry to get an idea of its financial well-being. At the very least, this will tell you when the A private company limited by shares incorporated and registered in England and Wales. was The legal process to have formed a company., who is involved in it, and give you a history of the accounts that it has filed.
Be wary if you see that the A private company limited by shares incorporated and registered in England and Wales. has few assets, was recently The legal process to have formed a company. or has experienced The inability to pay debts as they become due. issues in the past. This will help you to avoid problems such as contracting with a brand new shell A private company limited by shares incorporated and registered in England and Wales. (which will usually have no, or very few, assets of its own), set up only to deal with and make payments to you. If you are concerned, you can ask for a (1) In the context of debt, a contract where someone agrees to pay if the debtor cannot pay themselves. (2) In the context of sale of goods, a promise to a customer which is given freely (without charging extra money) that the goods they are buying will meet certain standards, and if they do not the person making the promise will do something to make up for that (eg give a refund, or repair or replace the goods). from its more established A larger company which has control over a smaller, subsidiary company, usually because it holds the majority of voting rights in the subsidiary company. or even a Where an individual promises to provide a payment or some form of benefit in the case of some form of loss occurring. A personal guarantee may be, for example, to pay an amount of an individual's own money to a bank in the event that a company becomes insolvent. from a The directors of a company are the individuals who make up the company's board of directors. Directors may be natural persons or companies, but each company must have at least one director who is a natural person. The board is the main decision-making body of the company. or other individual in case the new A private company limited by shares incorporated and registered in England and Wales. fails to pay.
You could also buy a credit report on a A private company limited by shares incorporated and registered in England and Wales. from a credit reference agency, which will usually charge a small fee for a single credit report.
A client's poor financial health does not mean you should avoid them, but it might prompt you to take more precautionary steps to protect your interests. See Q&A 2 for the kind of things you can do to minimise the risk posed by a client in poor financial health.
You can:
buy a credit report on an individual from a credit reference agency, which will usually charge a small fee for a single credit report; and/or
search for your debtor's name in the Gazette's online search function to find if there are any The inability to pay debts as they become due. notices about them eg if they have been made Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor., or, if a A private company limited by shares incorporated and registered in England and Wales. , it is the subject of any The inability to pay debts as they become due. proceedings.
A client's poor financial health does not mean you should avoid them, but it might prompt you to take more precautionary steps. See Q&A 2 for the kind of things you can do to minimise the risk posed by a client in poor financial health.
Large businesses have an obligation to publish information about their payment practices, which includes information about the average time they take to pay their invoices.
You can check for payment practices reports on the government's payment practices website.
If your customers and clients are smaller businesses or individuals there is not much you can do to find out if they have a history of late payments. There are some voluntary codes of conduct. For example, you could check whether your customer or client has been granted an award under the Fair Payment Code (which replaced the previous Prompt Payment Code on 3 December 2024). The Fair Payment Code rewards best practice and collaboration with suppliers with Gold, Silver and Bronze tiered awards: a Gold Award is for those firms that pay 95% of all invoices within 30 days; Silver is for those that pay 95% of all invoices within 60 days, including at least 95% of invoices to small suppliers (those with less than 50 Individuals hired personally to work under contracts of employment, usually in exchange for payment. Employees are normally fully integrated into the business and the employer exercises a large degree of control over their work.) within 30 days; and Bronze is for those that pay 95% of all invoices within 60 days.
You can check the searchable list of businesses that have been accepted to the Fair Payment Code on the Fair Payment Code's website Prompt Payment Code's website. Awards under the Fair Payment Code are limited to two years, and businesses will need to reapply at the end of each period.
You could also look for recommendations and reports by others who have dealt with your prospective client in the past, eg through a general search online, although be wary of references that the customer chooses to send you themselves.
You can normally only charge interest on late payments in three situations:
if your contract or agreement says you can (you can use Terms and conditions to provide for payment of late interest);
if your agreement does not say anything about interest, and the money is owed by another business; or
if (for any debt) you end up having to make a claim in court for it.
In some circumstances, you can also charge a fixed amount to cover your expenses if a payment is late. See Q&A 14.
For interest on court judgments, see Q&A 53 and following.
The interest rate you can charge and the date from which it starts to accrue varies depending on the basis on which you are charging it. If:
your contract provides for interest on late payments, see Q&A 9;
your contract does not provide for interest on late payments and your client or customer is a A person who purchases goods and services for personal use. Someone who is acting outside of their professional or working capacity. , see Q&A 10; or
your contract does not provide for interest on late payments and your client or customer is another business, see Q&A 11.
Once a payment is overdue, you can charge interest if your payment terms say so. Terms and conditions contains Provisions or sections. Usually in a contract. where you can provide for payment of late interest.
If your client or customer is a A person who purchases goods and services for personal use. Someone who is acting outside of their professional or working capacity. (rather than another business, including a A business owned and operated by a single individual, which is not a company or partnership. The individual is entitled to keep all profits made by the business (subject to any tax reduction) but is also personally responsible for any losses that the business makes.) you must ensure that any late payment interest is not disproportionately high. If it is too much, your customer will be able to legally challenge the rate. It is recommended that you should not charge excessively over the Bank of England base rate; 4% to 8% over base rate is standard in most industries.
It is advisable to inform your customer or client that you are about to start adding interest to their debt before doing so as it may prompt them to make a payment.
No interest is chargeable unless:
the customer agrees to it; or
they owe you more than £5,000, you bring a legal claim for the debt and get a court judgment against them.
See Q&A 53 for charging interest on a judgment debt. The usual rate of interest is 8% per annum.
You can charge The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest. on late payments if:
the money is owed to you by another business; and
your payment terms do not already include a penalty for late payment.
The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest. is designed to act as a deterrent to prevent the late payment of invoices, therefore if you are planning on charging it on late payments, you should inform your debtor of this in advance. See Q&A 15 and following for the steps you should take to chase payment of invoices and to notify the other business of your intention to charge The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest..
See Q&A 12 and following for details of the interest you can add in these circumstances and Q&A 14 for the additional charge you can add to the debt to cover your costs.
This is the interest you can charge another business on late payments, provided you have not agreed to a different interest rate (or other penalty for late payment).
It is 8% over the The official interest rate for borrowing money, set by the Bank of England. per annum (you can check the current base rate on the Bank of England website) .
See Q&A 11 for what debts attract The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest..
You can charge The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest. as soon as the payment becomes late.
The exact date that the payment becomes late depends on when you agreed it was due:
if you have an agreed payment deadline of 60 days or less, you can charge interest from the day after payment was due;
if you do not have an agreed payment deadline at all, you can charge interest after 30 days of you doing your part under the contract;
if you agreed to payment in advance, you can charge interest if you have done your part under the contract anyway, starting on the day after you finish; and
if you have agreed a payment deadline of over 60 days after you have done your part, the position is more complex. If the long payment period is grossly unfair to you, you can start to charge The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest. after 60 days, even though the payment is not actually late yet.
Whether a long payment deadline is grossly unfair to you depends on your circumstances. What is standard in your industry and whether or not there is a good reason for the long deadline are particularly relevant.
Yes, if you can charge The interest that one business can charge another on late payments, provided that the agreement between them does not give a different rate of interest. (see Q&A 11), you can also charge an extra fixed sum to cover your expenses for dealing with the late payment.
The basic amount you can charge depends on the amount of the debt due:
if the debt is less than £1,000, you can charge £40;
if the debt is £1,000 or more but less than £10,000, you can charge £70; and
if the debt is £10,000 or more, you can charge £100.
If this does not cover your reasonable costs of pursuing the late payment, you can claim back the additional expense too. What is reasonable will depend on the circumstances, but could, for example, be an hourly rate that you would normally charge for your time to cover the time you have spent chasing the debt.
For example, a Someone who purchases goods, digital content or services as part of their business, trade or profession, rather than as a consumer. owes you £5,000 for Physical items being sold. Distinguished from digital content and services, neither of which are physical items. you have provided. Your contract gave them 30 days to pay and they are now 90 days late. There is no provision in your contract for interest to be payable if they are late. You can charge your customer £5,000 for the Physical items being sold. Distinguished from digital content and services, neither of which are physical items., interest at 8% per annum above base rate for 90 days, and the fixed sum of £70.
Once a payment becomes late, you should immediately take steps to chase your debtor. See here a suggested timeline for chasing payment of unpaid invoices: Debt collection timeline. This timeline is included, along with a how-to guide and all the relevant documents you need, in Debt collection toolkit.
The steps you take to chase payment of an invoice are ultimately a commercial decision for your business, but the below is a suggested cost-effective course of action to take before considering taking your debtor to court.
Make immediate contact
Find out why there has been a delay. Be polite and professional but make it clear that you expect payment within a certain time frame, and follow up with a further phone call or email if a specific time frame is agreed and payment is still not received. Follow up any phone calls with an email or letter confirming what was said. It is important to have a written record of your correspondence where possible.
Send chasing letters
The below is a suggested timeline for escalation:
if your invoice remains unpaid five days after it has become late, send First letter chasing payment;
if your invoice remains unpaid 15 days after it has become late, send Second letter chasing payment, explaining that if payment is not received promptly, you may charge interest on the debt and/or apply a late payment charge (see Q&A 7 and following for more information about when you can add interest and late payment charges); and
if your invoice remains unpaid 30 days after it has become late, send Final letter chasing payment, explaining that if payment is not received, you will apply interest and other debt recovery charges (if appropriate) and will take further debt recovery action.
Formally escalate your debt recovery actions
Consider the impact of taking formal action against a customer on your ongoing business relationship with them, and any cost implications of that. Weigh up whether the costs and time involved in escalating your debt recovery actions are worth your while or whether you would be better placed to simply write off the debt – see Q&A 84 for guidance on bad debt.
See Q&A 16 for your main options. You can also find a how-to guide and all the relevant documents you need in Debt collection toolkit.
If you have chased money owed to you and no payment has been forthcoming, there are various options available to you. Consider whether any of the following are suitable:
Using a debt collection agency or lawyer
This can be a cost-effective method of getting your money back if your relationship with your client has already broken down – see Q&A 18 and following for more information about when and how to do this.
ADR: A collective description of methods of resolving disputes otherwise than through the normal trial process, which include mediation or arbitration. (Alternative Dispute Resolution: any method of settling a legal dispute without it escalating to court. This might include options such as mediation or arbitration. )
You can use any ADR: A collective description of methods of resolving disputes otherwise than through the normal trial process, which include mediation or arbitration. scheme that you are part of, for example if you are a member of a trade association which runs its own scheme. If the money is owed to you by a larger business, you might be able to complain to the Small Business Commissioner about them. The Government is increasingly encouraging businesses to use Alternative Dispute Resolution: any method of settling a legal dispute without it escalating to court. This might include options such as mediation or arbitration. , such as A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement.. Alternative Dispute Resolution: any method of settling a legal dispute without it escalating to court. This might include options such as mediation or arbitration. can often provide a quicker solution than going to court, and can help preserve existing business relationships and supply chains.
A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee.
Consider sending your debtor a type of formal demand for payment, called a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. – see Q&A 27 for more information about how to send one to an individual and Q&A 32 for more information about how to send one to a A private company limited by shares incorporated and registered in England and Wales. .
Selling the debt
You could sell the debt to someone else if you have immediate cash flow concerns and do not want to pursue the debt yourself. For example if you do not have the time or resources to do so – see Q&A 23 for more information about this. Such sales are usually at a substantial discount.
Unless your contract says that you must, it is your choice as to whether to accept a proposal for payment by instalments, but there may be sensible business reasons for you to consider it.
Accepting instalments necessarily involves you Giving up or abandoning a legal right. your strict rights under your contract, so consider any such action carefully before you take it as you may be unable to go back on it if receiving payments by instalment becomes inconvenient later. It is sensible to agree any instalments clearly in writing, specifying that the arrangement is a one-off and that the usual contractual payment terms will apply for any and all other debts.
Instructing a debt collection agency to recover a debt you are owed sends a strong message and if your business relationship has already disintegrated, it can be a cost-effective method of recovering some of the money you are owed in comparison to going to court.
A debt collection agency will take over recovery of your unpaid invoice, investigating your debtor's financial status, future trading prospects and ability to repay the debt. Usually they will either contact your debtor to organise a repayment plan or determine that your debtor will be unable to pay and recommend that you write off the debt rather than incurring the costs of pursuing them further (see Q&A 84 for more information about when to write off a bad debt).
Things to bear in mind when considering instructing a debt collection agency include:
cost (see Q&A 19);
there is a limit to what debt collection agencies can do. Debt collectors do not have the same powers as court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. (which you can use once you have obtained a court judgment for the money owed – see Q&A 48 and following), for example they cannot seize Physical items being sold. Distinguished from digital content and services, neither of which are physical items., or enter premises without being invited.
Remember that when you are giving your clients' or customers' financial information to a A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract., you need to ensure that you comply with your The area of law which deals with the way in which data can be handled. obligations. See The rules about sharing personal data for full details.
Debt collection agencies charge a fee, which will usually be a percentage of the total amount of the debt and may also include a fixed administration fee. The percentage fee charged will likely be much larger if the payment is more than 90 days late, although many collection agencies also offer a 'no collection no fee' service, which reduces the cost risk to you of pursuing this option.
Reputation is important. When instructing a debt collection agency, check their reputation, eg using online searches or recommendations, and ensure that you give clear instructions about what you do and do not expect them to do. It is also best practice for you or the debt collecting agency to contact your debtor to let them know who will now be making contact with them about their debt.
Choosing a reputable debt collection agency will minimise the risks of the agency (and by extension your business) breaking the law by distressing or harassing any debtors (see Q&A 21).
Yes, if the agency is not a reputable one. It is an offence for debt collectors to harass debtors in a way which is meant to distress or humiliate them or members of their family or household. You could also be guilty of an offence and fined up to £5,000 if you are involved in the debt collector taking any such action (even if you do not act unlawfully yourself).
From a reputational standpoint, you may want to think carefully before taking any debt collection measures which may be seen as aggressive or unreasonable. It is best practice to ensure you have considered all reasonable alternatives before using an agency to collect debts, and to ensure you choose a reputable one (see Q&A 20).
It may be appropriate for you to instruct a solicitor (rather than, say, a debt collection A person who acts on behalf of another (eg an employee or a solicitor). – Q&A 18) if:
your debtor is a larger business with good cash flow, or an individual who has means but is simply not paying up; and
you are considering bringing legal action as a next step (this may depend on the value of the debt and you should bear in mind that it is possible to bring a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. to court without the assistance of a lawyer – see Starting a small claim against someone else for guidance on doing this, including how to write your own A final warning letter before legal action is taken. Also known as a letter before claim. using our template Letter before action).
If your client or customer is experiencing financial difficulties, it is less likely that a strongly worded letter from a solicitor will elicit payment, and you should consider other debt recovery actions, such as sending them a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. (see Q&A 27 and following) or bringing legal proceedings to allow you to enforce the debt in other ways, eg through taking Also known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. over your debtor's property (see Q&A 48 and following). In any event, it would be best practice to ensure you have considered all reasonable alternatives before instructing a solicitor.
Remember that when you are giving your clients' or customers' financial information to a A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract., you need to ensure that you comply with your The area of law which deals with the way in which data can be handled. obligations. See The rules about sharing personal data for full details.
If you want an instant cash injection from an unpaid invoice you can consider selling your debt to a A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract.. While you will not recover the full value of the invoice, you will no longer have to go to the trouble of collecting the debt yourself and this may be the best way for you to deal with any cash flow issues you are facing.
Before entering into any arrangement to sell your debt, check that your agreement does not prevent you from assigning or otherwise transferring it to someone else. If your business is an Small or Medium-sized Enterprise: A business which is small or medium sized in terms of its staff numbers, turnover or assets. and the contract was entered into after 31 December 2018, in most cases it cannot forbid you from selling a debt you are owed under it to someone else. Remember that when you are giving your clients' or customers' financial information to someone else, you need to ensure that you comply with your The area of law which deals with the way in which data can be handled. obligations. See The rules about sharing personal data for full details.
There are three main ways that you can sell on or otherwise raise finance from debts you are owed:
assigning your debts to someone else in exchange for a percentage of their value – most suitable when you wish to completely wash your hands of a debt (see Q&A 24);
(In finance) A financier, also known as a factor, provides money to a business by buying the business's outstanding invoices. The amount made available by the factor will equal most of the amount owed under the invoices, the balance being made available when the invoices have been paid. Unlike with invoice discounting, the factor will manage the invoices and collect the debts directly from the business's customers. (selling your right to collect debts to someone else) – most suitable when you need to release some cash flow from unpaid invoices and are happy for someone else to take care of your debt collection (see Raising money by factoring debts); and
A financier provides money to a business by buying the business's outstanding invoices. The amount made available will equal most of the amount owed under the invoices, the balance being made available when the invoices have been paid. Unlike with factoring, the business will keep control over the collection of its invoices. – you get upfront payments when you issue your invoices and repay the invoice discounter when your customer pays you. This can be suitable if you want to release some cash flow from unpaid invoices, but do not wish to hand responsibility for collecting debts over to someone else, eg because you want to maintain close client relationships (see Raising money by invoice discounting).
If you are interested in methods of raising finance for your business other than from debts, see Choosing between issuing shares and borrowing.
Assignment is the process of selling your debt outright to a A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract., which means that your debtor will owe money to them instead of you.
Debt purchasers typically offer a very low price to take on debts, often as little as 10% of the debt's value, particularly if the debt has been outstanding for some time. Assigning a debt is therefore usually a last resort or an alternative to writing the debt off entirely (see Q&A 84 for more information about when to write off a bad debt).
Debt purchase through assignment is almost exclusively offered by specialist firms (who often also offer debt collection and other related services) which can be found readily online, but note that these firms may be unwilling to purchase individual debts. When gathering quotes, key points to look out for include:
which of the debts owed to you they will consider buying (it is often very hard to find someone willing to buy low value debts or debts which are long overdue, as it is not worth their time and resources to try and collect these debts);
the price they will pay (as a percentage of each debt, and the total this will add up to);
how quickly you will be able to complete the process and receive your money; and
what information and (1) In the context of debt, contracts under which one person agrees to pay the debtor's debts if the debtor cannot pay themselves. (2) In the context of sale of goods, promises to a customer which are given freely (without charging extra money) that the goods they are buying will meet certain standards, and if they do not the person making the promise will do something to make up for that (eg give a refund, or repair or replace the goods). you need to give the purchaser.
If you do decide to assign debts you are owed, you must do so in writing and sign the document for it to be legally effective. You must then notify your debtor that you have assigned their debt to the buyer and tell them that they should direct all payments and communication to the buyer from now on. The debt purchaser may provide you with a particular wording or a letter they would like you to use to give this notification, but if not you can create your own Notice of debt assignment. You must send the notice by A postage service where the item is tracked and signed for on delivery, so that the sender can have proof of delivery. and keep a record of it. This is important as the assignment will only be complete when the debtor has been properly notified of the change in ownership of the debt.
A A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. is a formal, written demand for payment of a debt that you can send to your debtor without going to court and without paying any kind of court fee.
For individuals, you can use your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. (if unpaid) as the basis for a later Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. application to the court. You must be owed at least £5,000 to be able to apply to make a person Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor..
For Private companies limited by shares incorporated and registered in England and Wales. , you can use your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. (if unpaid) as the basis for a later application to The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. the A private company limited by shares incorporated and registered in England and Wales. . You must be owed at least £750 to be able to apply to The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. a A private company limited by shares incorporated and registered in England and Wales. .
It is cheaper and quicker to send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. than take any enforcement step requiring formal court procedures. It is also potentially more serious for your debtor than receiving chaser letters or contact from a debt collector, because of the risk that you will bring Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. or The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings against them if the debt is large enough (£5,000 if the money is owed by an individual, £750 if it is owed by a A private company limited by shares incorporated and registered in England and Wales. ).
You should be cautious of sending a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. if you think that your debtor may dispute whether the debt is payable. They can challenge it in court if they disagree with it and if they are successful in doing so, you could have to pay their Fees, charges and expenses paid to lawyers for their services..
If the debt is disputed, see Resolving disputes proactively for more information about what action you can take take.
To send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to an individual for a debt (including partners in a partnership and Businesses each owned and operated by a single individual, which are not companies or partnerships. The individual is entitled to keep all profits made by the business (subject to any tax reduction) but is also personally responsible for any losses that the business makes.) you must:
Fill in the right form
See Q&A 30 for which form to fill in and guidance on how to do it.
Give the form to your debtor
You must do everything that you reasonably can to bring the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to your debtor's attention and, wherever it is practical to do so, you must give it to them in person.
If you think that you will have difficulties giving the form to your debtor, you can ask a A specialist at serving court or official documents personally on people or to a specified address. to do this for you. They will either charge you a fixed fee or an hourly rate to bring your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to your debtor's attention and will usually provide you with evidence of service (which you will need if you choose to escalate the matter – see below) once they have successfully delivered it.
Get evidence that you gave the form to your debtor
It is important to ensure you have evidence that you have brought the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to your debtor's attention, particularly if you intend on later bringing Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings against them. Keep a copy of the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. and a record of the time, date and address where you handed the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to your debtor and anything else that confirms that your debtor has received it, eg any correspondence in which they acknowledge receipt (note you should be keeping any correspondence from your debtors anyway).
For the position if you are owed money by a A private company limited by shares incorporated and registered in England and Wales. , see Q&A 32.
The particular form you need to complete depends on the nature of the debt you are owed (and if you are sending a demand to a partnership, you will need to fill in a separate form for each partner):
Form SD2 should be used if the debt is payable immediately (see here for guidance notes to complete the form: Step-by-step guide to form SD2);
Form SD4 should be used if the debt is payable following a judgment or order of the court (therefore this should only be used if you are sending a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. after you have been to court and you are seeking to enforce your A command made by a court or a judge which requires a person to do or not do something. ) (see here guidance notes to complete the form: Step-by-step guide to form SD4); and
Form SD3 should be used if the debt is not payable immediately, but where you believe that your debtor has no reasonable prospect of paying it when it falls due. You will need to provide details about why you believe that your debtor has no reasonable prospect of paying the debt in the future (see here guidance notes to complete the form: Step-by-step guide to form SD3).
Once your debtor has been Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules., one of the following three things will happen:
They pay up
You are either paid the money you are owed or your debtor seeks to reach a An agreement recording the fact that the parties in a legal dispute (or potential legal dispute) have resolved the issue between them. Particularly common in employment disputes. with you (eg by offering to pay by instalments).
They say they do not owe you the money
They have 18 days after being Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. with your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to formally challenge it and the court will either dismiss their challenge or fix a hearing to consider it with your input. If this happens, you should instruct a lawyer to represent you. Bear in mind that if your debtor is successful in getting the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. set aside, you may have to pay their Fees, charges and expenses paid to lawyers for their services..
They ignore the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. or otherwise do not repay you
If the debt is £5,000 or more, your debtor fails to pay it or challenge the demand, and at least three weeks have passed since you delivered it to them, you can bring Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings against them (see Q&A 35 and following for more information about making someone Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor.).
To send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to a A private company limited by shares incorporated and registered in England and Wales. you must:
Fill in the right form
Use Form SD1 if you want to send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to a A private company limited by shares incorporated and registered in England and Wales. . Guidance notes for completing Form SD1 can be found here: Step-by-step guide to form SD1.
Deliver the form to the A private company limited by shares incorporated and registered in England and Wales.
You must deliver your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to your debtor by:
leaving it (not by posting) at the A private company limited by shares incorporated and registered in England and Wales. 's An address a company is required to have, which must be in the same UK jurisdiction in which the company is registered, to which communications and notices may be sent. if your debtor is a registered A private company limited by shares incorporated and registered in England and Wales. (you can find any A private company limited by shares incorporated and registered in England and Wales. 's An address a company is required to have, which must be in the same UK jurisdiction in which the company is registered, to which communications and notices may be sent. using the Companies House search function); or
if your debtor is an unregistered A private company limited by shares incorporated and registered in England and Wales. , by leaving it at your debtor's principal place of business or delivering it to the secretary, a The directors of a company are the individuals who make up the company's board of directors. Directors may be natural persons or companies, but each company must have at least one director who is a natural person. The board is the main decision-making body of the company. or other person holding a senior position within the A private company limited by shares incorporated and registered in England and Wales. .
If you wish, you can ask a A specialist at serving court or official documents personally on people or to a specified address. to do this for you. They will either charge you a fixed fee or an hourly rate to leave your A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. in the right place and will usually provide you with evidence of service (see below) once they have done so.
Get evidence that you gave the form to the A private company limited by shares incorporated and registered in England and Wales.
It is important to ensure you have a record of delivery of the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee., particularly if you intend on later bringing The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings. Keep a copy of the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. and a record of the time, date and address where you Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. and anything else that confirms that your debtor has received it, eg any correspondence in which they acknowledge receipt (note you should be keeping any correspondence from your debtors anyway).
For the position if your debtor is an individual, see Q&A 29.
Use Form SD1 if you want to send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to a A private company limited by shares incorporated and registered in England and Wales. . Guidance notes for completing Form SD1 can be found here: Step-by-step guide to form SD1.
Once your debtor has been Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules., one of three things will happen:
The A private company limited by shares incorporated and registered in England and Wales. pays up
The A private company limited by shares incorporated and registered in England and Wales. pays you the money you are owed or seeks to reach a An agreement recording the fact that the parties in a legal dispute (or potential legal dispute) have resolved the issue between them. Particularly common in employment disputes. with you (eg by offering to pay in instalments).
The A private company limited by shares incorporated and registered in England and Wales. says it does not owe you the money
The A private company limited by shares incorporated and registered in England and Wales. contacts you to dispute the debt and request that you refrain from applying to wind it up (this may ultimately lead to them asking a court for an An order of the court which usually prevents a person from doing something or requires a person to do something. to prevent you from trying to wind them up), in which case you should instruct a lawyer to represent you. See Q&A 42 and following for more information about The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings.
The A private company limited by shares incorporated and registered in England and Wales. ignores the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. or otherwise does not repay you
If the A private company limited by shares incorporated and registered in England and Wales. fails to pay and at least three weeks have passed since you delivered the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee., you can commence The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings (see Q&A 42 and following for more information about bringing The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings).
Yes; provided that they owe you £5,000 or more you can start Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings against them to force their assets to be sold to pay their debts if:
most commonly, you Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. for your debt on them over three weeks ago which has not been complied with (see Q&A 27 and following for more information about how to make a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee.); or
you have a judgment debt which you have attempted to enforce in some other way (eg by using court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. – see Q&A 65), which has not resulted in you being paid in full.
There is no certainty that it will result in you getting paid and the process can take a long time.
You are unlikely to get all of the money you are owed if your debtor is made Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. as it is a process for the benefit of all People or businesses to whom money is owed. , not just you. You will usually get an equal proportion to everyone who is owed money of anything available, which may just be pence in the pound. It could also take weeks, months or even years (in complex cases) for your debtor's assets to be sold if they are made Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor., and remember that if they have no assets, you will not get anything back at all. If this is the case, consider writing off the debt rather than wasting any more time and money in chasing it (see Q&A 84 for more information about when to write off a bad debt).
You should also bear in mind before you start that once Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings are underway, you are unlikely to be allowed to pursue other debt recovery avenues without the permission of the court. It may be sensible to try other options first, eg bringing a claim and using People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. to enforce your court judgment (see Q&A 66 and following for how to go about this).
If you want to bring Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings you should instruct a lawyer. The following is an overview of the process only; full coverage of The inability to pay debts as they become due. proceedings is outside the scope of this service.
To Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. someone who owes you money, you must send a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. petition to court and to your debtor. It will be considered by the court at a hearing and your debtor will be declared Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. if the court agrees with your petition. It is common for bankruptcies to involve multiple hearings and to be adjourned to give the debtor time to make payments or agree an instalment plan with you. Other parties who are owed money by the same person may get involved in proceedings.
If a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. order is made, an official receiver will be appointed to find, realise and distribute your debtor's assets to all known People or businesses to whom money is owed. .
Aside from any lawyer's costs, there are fees to pay to the court to start a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. petition of £343 together with a petition deposit of £1,500. The deposit is Also known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. for the initial administration fee, and will be returned to you either once a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. order is made (save to the extent that your debtor's assets will not cover it) or if no Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. order is made for some reason. In the latter case a £50 administration charge will be retained by the court.
You can check whether a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. petition has been brought against your debtor by carrying out an Official Search at the Land Registry.
If you find another petition, contact the petitioning A person or business to whom money is owed. using the details on the petition to let them know about the debt you are owed to ensure that you are listed as a A person or business to whom money is owed. . It is much cheaper to support another petition than to bring your own and there is no advantage to being the petitioning A person or business to whom money is owed. .
You can check whether any Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. orders have been made against someone by searching the Individual Insolvency Register or contacting the The inability to pay debts as they become due. Enquiry Line on 0200 678 0015 or by email to insolvency.enquiryline@insolvency.gsi.gov.uk.
If a person who owes you money is already Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor., you must register as a A person or business to whom money is owed. by contacting the official receiver (a court appointed official) or The inability to pay debts as they become due. practitioner who has been appointed to handle the Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. (although they may contact you first if they already know that you are a A person or business to whom money is owed. ). Provided you are in time, you will be added to the list of People or businesses to whom money is owed. and will be kept informed of any progress.
Typically, if your debtor is a A private company limited by shares incorporated and registered in England and Wales. and owes you £750 or more you can start The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings against it to force the sale of the A private company limited by shares incorporated and registered in England and Wales. 's assets to pay its debts if:
most commonly, you Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. for your debt against the A private company limited by shares incorporated and registered in England and Wales. over three weeks ago which has not been complied with (see Q&A 32 for how to make a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee.);
you have a judgment debt which you have attempted to enforce in some other way (eg by using court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. – see Q&A 65), which has either been wholly or partly unsuccessful; or
rarely, you can otherwise prove that your debtor's assets are less than its liabilities.
There is no certainty that The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. a A private company limited by shares incorporated and registered in England and Wales. will result in you getting paid money you are owed and the process can take a long time. You will not usually get all of the money you are owed if your debtor is wound up as the process is for the benefit of all People or businesses to whom money is owed. , not just you. You will usually get an equal proportion with them (which may just be pence in the pound). You should only consider this option if you believe that your debtor is Unable to pay debts as they become due. (see Q&A 57 for more information on how to find out about your debtor's income and outgoings). It could also take weeks, months or even years (in complex cases) for your debtor's assets to be sold if the A private company limited by shares incorporated and registered in England and Wales. is wound up, and remember that if they have no assets, you will not get anything back at all. If this is the case, consider writing off the debt rather than wasting any more time and money in chasing it (see Q&A 84 for more information about when to write off a bad debt).
You should also bear in mind before you start that once a The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. order has been made, you will not be able to take any other enforcement action without the court's permission. It may be sensible to try other options first, eg bringing a claim and using People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. to enforce your court judgment (see Q&A 65 and following for how to go about this).
If you want to bring The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings you should instruct a lawyer. The following is an overview of the process only; full coverage of The inability to pay debts as they become due. proceedings is outside the scope of this service. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.
If no The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings are underway already (see Q&A 45), to start your own proceedings, you will need to file a The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. petition at court. A short hearing will be set for your petition at which your debtor may oppose it and other People or businesses to whom money is owed. may attend and ask to have a say in what happens. It is common for such hearings to be adjourned to allow the A private company limited by shares incorporated and registered in England and Wales. time to pay or agree an instalment plan with you.
If a The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. order is made, a A person appointed to wind up the affairs of a company. will be appointed to realise and distribute the assets of your debtor among its known People or businesses to whom money is owed. .
Aside from any lawyers' costs, if no The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings are underway, you will need to file a The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. petition and pay the court fee of £343 and a petition deposit of £2,600. The deposit is Also known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. for the initial administration fee, and will be returned to you either once a The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. order is made (save to the extent that your debtor's assets cannot cover it) or if the petition is dismissed by the court, save for a £50 administration charge which is retained.
You can check whether The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings are being brought against your debtor by searching its entry on The registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public.. It's free to use the Companies House search, where you can find information about any registered A private company limited by shares incorporated and registered in England and Wales. , including whether it is being wound up. This will either be in the 'A private company limited by shares incorporated and registered in England and Wales. status' field or there will be a separate tab under the A private company limited by shares incorporated and registered in England and Wales. 's name with details of the The inability to pay debts as they become due. proceedings. Alternatively, you could search for your debtor's name in the Gazette's online search function for notices of any The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. petitions or The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. orders against it.
If there is an existing The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. petition, contact the petitioning A person or business to whom money is owed. using the details provided to let them know about the debt you are owed and to ensure that you are listed as a A person or business to whom money is owed. . You will be added to the list of People or businesses to whom money is owed. , which means you will be kept informed about the case and allowed to vote on decisions at any People or businesses to whom money is owed. ' meetings.
It will almost always be important for you to send chaser letters to recover money you are owed before bringing legal proceedings (see Q&A 15 for templates and a suggested timeline). Bringing legal proceedings should almost always be a last resort, where you have exhausted other options and taken all reasonable measures to chase the debt. You can find a how-to guide and all the relevant documents you need to chase a debt in Debt collection toolkit, and guidance and documents on how to start a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. in Small claims toolkit.
A court claim can be an effective method of debt recovery as (if you are successful) your debtor will receive a A command made by a court or a judge which requires a person to do or not do something. demanding payment. However, you will incur upfront costs (eg court fees) and it is not a quick process. Therefore, the point at which you decide to escalate your debt recovery action will depend on the circumstances of your debt and the reason for non-payment. At the very least, you should consider the following before starting legal proceedings:
The cost of starting court action versus the value of the debt you are owed
See Q&A 49 for a summary of the likely costs. If your claim is a straightforward one for £10,000 or less, see Considerations before bringing a small claim for a run-down of the costs involved.
The time it will take you to bring legal proceedings versus your cash flow needs
Bringing legal proceedings can be a time consuming process. Once you have made your claim, your debtor will have up to 28 Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. to provide their defence (if they dispute the debt). If they do defend your claim, it can take months to resolve, and court schedules and timetables are running under considerable pressure and backlogs. There is also no certainty that you will get your money even with a A command made by a court or a judge which requires a person to do or not do something. and while there are a number of post-judgment enforcement actions that you can take, these will likely incur further costs and take time (see Q&A 50 and following for more information about post-judgment enforcement). If you need immediate cash flow, it may be preferential for you to consider other options such as selling your debt to a A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract. (see Q&A 23 and following for more information) or serving a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. to try and prompt voluntary payment (see Q&A 27 and following).
The reason for non-payment
Court action may be appropriate if your debtor is simply not paying up even though they have the means to do so. If your debtor has no money there is little point in bringing Legal action which is being pursued through a court. as you are unlikely to recover the money you are owed. You can consider bringing The inability to pay debts as they become due. proceedings (ie applying to make an individual Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. or to wind a A private company limited by shares incorporated and registered in England and Wales. up) as this may enable you to recover some of your debt, but the process is long and if your debtor genuinely has nothing, there is very little you can do (see Q&A 35 and following for more information about The inability to pay debts as they become due. proceedings).
Remember that obtaining a A command made by a court or a judge which requires a person to do or not do something. does not necessarily mean you will get your money back and you may still need to take further post-judgment enforcement actions (see Q&A 50 and following for information about post-judgment enforcement).
You will need to pay court fees when you start legal proceedings and you will also incur Fees, charges and expenses paid to lawyers for their services. if you decide to instruct a lawyer. Note that, if the debt is less than £10,000, it is perfectly possible to bring a claim without a lawyer if you wish. See Starting a small claim against someone else for guidance on doing this and Considerations before bringing a small claim for a run-down of the costs involved in a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer.. We also have a template Letter before action that you can use, whether your debtor is another business or a A person who purchases goods and services for personal use. Someone who is acting outside of their professional or working capacity. . This letter can also be found in Small claims toolkit, along with other documents and guidance to help you through the process of starting a court claim.
If you win your case, unless it is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., the court is likely to order your debtor to pay some of your costs. Even if this is the case there is no certainty that you will actually get a payment for either these costs or the debt itself. If the debt you are owed is of minimal value, consider using a debt collection agency (see Q&A 18) or perhaps even writing off the debt if it is not worth the time and expense you will spend in collecting it (see Q&A 84).
If you lose the case, unless it is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., you may well be ordered by the court to pay some or all of the costs incurred by the other side.
The A command made by a court or a judge which requires a person to do or not do something. will usually give a date by which the money has to be paid to you, but if it does not specify a date, the other side has 14 days from the date of the order to pay up.
If your debtor does not pay you may be able to charge additional interest on the judgment debt (see Q&A 53). You can also consider taking one (or more) of the following common enforcement actions. It is recommended that you instruct a lawyer when pursuing the majority of these actions:
applying to the court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. to collect the money you are owed (see Q&A 65);
if your debtor is an individual who is in employment, applying for an attachment of earnings order to get the money you are owed deducted from their wages (see Q&A 71);
applying to freeze the money you are owed in your debtor's bank account and getting the bank to pay the money over to you, known as a A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder. (see Q&A 77);
if your debtor owns property, securing the money you are owed on that property by applying for a charging order (see Q&A 80); and/or
bringing Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. proceedings if your debtor is an individual (see Q&A 35) or winding-up proceedings if your debtor is a A private company limited by shares incorporated and registered in England and Wales. (see Q&A 42).
If at any point after you have started formal enforcement action your debtor pays you back either in part or in full, you must immediately inform the court in writing.
There are further enforcement actions that your lawyer may advise you to consider which are less common and outside the scope of this service. These include applying for a An injunction to prevent a party to legal proceedings from removing his assets from the jurisdiction or otherwise dealing with them., which may be used when there is a risk that your debtor will get rid of their money (eg by moving it offshore or transferring it to another business or individual) to avoid paying you or the appointment of a receiver to preserve assets if there is a dispute over the debt.
Not all enforcement actions will be suitable to your specific case and you should consider carefully whether they will be worthwhile before you incur the time and expense involved in pursuing them. Things that you should bear in mind include whether your debtor owes money to other People or businesses to whom money is owed. who might be taking their own action (see Q&A 56 for more information about how to find out if any other judgments have been made against them) and whether your debtor can actually afford to pay you back (eg what your debtor's income and outgoings are and what assets or property it owns). See Q&A 57 for how to find out about your debtor's financial situation.
Remember that at any point, you can consider writing off the debt you are owed if you receive information which suggests that enforcement action will be fruitless (see Q&A 84 for more information about when to write off a bad debt).
Yes. You can consider using more than one method to enforce a judgment (see Q&A 51) at any one time, with some limitations:
if you commence either Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. or The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings (see Q&A 35 and following) you will usually be restricted from taking further enforcement action once they are underway; and
if you get an attachment of earnings order to get payments out of your debtor's wages, you cannot pursue other debt recovery options so long as it is being honoured (see Q&A 71).
Yes.
If your judgment was made in the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court., you will be able to charge interest of 8% per annum from either the date of the judgment or the date specified on the A command made by a court or a judge which requires a person to do or not do something. , even if your agreement does not mention it.
Yes, if your judgment was made in the A local court for civil (non-criminal) claims between people or companies. and either:
the judgment debt is more than £5,000; or
your debtor is another business and the debt relates to an agreement for the supply of Physical items being sold. Distinguished from digital content and services, neither of which are physical items. and services.
If the debt is worth less than £5,000 you will not normally be able to charge interest on a judgment sum unless your contract with the debtor provides for interest to be applied. Remember that if your client or customer is a A person who purchases goods and services for personal use. Someone who is acting outside of their professional or working capacity. , you must ensure that any contractual interest payable is not disproportionately high and it must be brought clearly to your customer's attention when the contract is entered into and again before you seek to charge interest.
If you are claiming interest on your judgment debt, remember to include it when taking steps to enforce the judgment.
You can usually charge interest of 8% per annum. The interest will usually accrue from the date on which the judgment debt is payable under the order, unless the court expressly says that it should be payable from a different date. Interest will stop accruing if you take any enforcement action to force payment eg by instructing court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. (except if you apply for a charging order to secure the debt on a property belonging to the debtor – see Q&A 80). However, if your enforcement action is unsuccessful, interest continues to accrue as if you had never brought it in the first place.
To help you to understand the financial health of your debtor (and therefore how likely it is that you will get your money back by enforcing your judgment), you can search the Register of Judgments, Orders and Fines. This will show you whether any judgments have been made against them in the last six years (unless they were paid off within one month of being made, in which case they will be removed from the register entirely once the Registrar is notified of the payment).
To conduct a search, you must either apply for a search online using the Trust Online website or write to the Registrar at Registry Trust Ltd, 153-157 Cleveland Street, London W1T 6QW. You will need to pay a fee of between £6 and £10 for each name that you search against, depending on how many registers you wish to search.
Understanding your debtor's financial situation (eg whether they own any property or other assets and what their income and outgoing are) can help you decide whether it is worth enforcing a judgment you have against them, and what enforcement action it is best to take. In some situations, your debtor's financial situation may mean that in fact you would be better simply writing off the money you are owed as a bad debt rather than pursuing it when there is little to no chance of your debtor paying up (see Q&A 84 for more information about when you should consider writing off a bad debt).
Any actions you took before going to court (see Q&A 15 and following) may have provided you with some insight into your debtor's financial situation, but if you want to find out more, you can:
Check whether The inability to pay debts as they become due. proceedings have been started against your debtor, or if they are already declared Unable to pay debts as they become due.
If you find someone else has applied to Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. or The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. your debtor, you cannot bring your own enforcement proceedings and should instead contact the person or A private company limited by shares incorporated and registered in England and Wales. who started the proceedings to register yourself as a A person or business to whom money is owed. . See Q&A 39 and following to find out about bankruptcies against an individual, and Q&A 46 to find out about The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. proceedings against a A private company limited by shares incorporated and registered in England and Wales. that owes you money.
Have your debtor attend court to be questioned about their finances
See Q&A 58 for how you can do this.
Yes. You can apply for an order that your debtor (or if your debtor is a A private company limited by shares incorporated and registered in England and Wales. , one of its The directors of a company are the individuals who make up the company's board of directors. Directors may be natural persons or companies, but each company must have at least one director who is a natural person. The board is the main decision-making body of the company. ) comes to court to provide information about how much money they have and whether they can afford to pay you back. The information you can obtain through this process includes details about your debtor's employment and salary, dependants, income, outgoings, property and details of bank accounts and their balances. This information can help you to decide how to go about enforcing your A command made by a court or a judge which requires a person to do or not do something. and what your prospects are of actually getting your money.
At the hearing your debtor will have to answer questions under oath about their financial status. The questions will usually be asked by a court In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. and you are permitted to attend and may ask questions if you wish to. If your application is referred to a judge, you should instruct a lawyer as you (or your legal representative) will have to conduct the questioning yourself. The court In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. will make a written record of the evidence given (unless a recording is made) and at the end of the hearing, will read the record to your debtor and ask them to sign it. You will be sent a copy of the record.
If judgment on the debt you are owed was given in the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court., it is advisable to instruct a lawyer to do this. Guidance here applies to judgments made in the A local court for civil (non-criminal) claims between people or companies. only.
Although you will have to pay court fees, these can be added to the amount your debtor already owes you if your application is successful. You can apply at any time after you obtain judgment on the debt by:
filling in the right application form (see Q&A 61 for which form to fill in); and
sending your application to court and paying the application fee (see Q&A 62 for where to send it).
There is no court hearing. Your application will be dealt with on paper and an order granted requiring your debtor to attend an appointment at their local A local court for civil (non-criminal) claims between people or companies. hearing centre to answer questions under oath about their finances.
You must speak to the court once the order is granted to find out who is responsible for serving the order on your debtor. If the court tells you that you are responsible then you (or a A specialist at serving court or official documents personally on people or to a specified address. if you want to pay one to do this for you) must personally give the order to your debtor (or if your debtor is a A private company limited by shares incorporated and registered in England and Wales. , to someone holding a senior position) at least 14 Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. before the appointment date. If you have been unable to To deliver or send documents to be used in court proceedings to someone in a way that complies with court rules. the order, you must let the court know at least seven Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. before the appointment.
In all cases, the final step is for you to swear an A written sworn statement of evidence. that you have followed the proper process and send it to the court. See Q&A 63 for guidance on how to prepare an A written sworn statement of evidence. using Form EX550, alongside our Step-by-step guide to form EX550.
The A written sworn statement of evidence. must be either filed at court at least two Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. before the hearing, or brought down to court on the hearing day with a copy of the order Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. attached to it (make sure you have enough copies for yourself, the court and your debtor). Call the court before you take your A written sworn statement of evidence. down (unless you intend on taking it on the day of the hearing) as you may need an appointment to hand it in. It is good practice to also attach your A written sworn statement of evidence. to a letter which clearly sets out when the hearing is due to take place. See here a template cover letter to send to the court: Letter filing form EX550 at court.
The court will then list the matter for a hearing. See Q&A 60.
If your debtor pays up in full before the hearing date, you should let the court know immediately.
Yes. Although normally the standard questions will usually be asked by a court In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches., you are permitted to attend and may ask questions if you wish to. If your application is referred to a judge for any reason, you should instruct a lawyer as you (or your legal representative) will have to conduct the questioning yourself.
You must make your application using the following application forms:
Form N316 if your debtor is an individual; or
Form N316A if your debtor is a A private company limited by shares incorporated and registered in England and Wales. .
If you want your debtor to produce particular documents at court, you should clearly list these in the relevant box on the form. Your debtor will be asked the questions in Form EX140 if they are an individual or Form EX141 if your debtor is a A private company limited by shares incorporated and registered in England and Wales. and an In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. of the A private company limited by shares incorporated and registered in England and Wales. is being questioned. You can request that additional questions be asked by attaching a list of proposed questions to your application form.
If your debtor is a A private company limited by shares incorporated and registered in England and Wales. and you want to question a The directors of a company are the individuals who make up the company's board of directors. Directors may be natural persons or companies, but each company must have at least one director who is a natural person. The board is the main decision-making body of the company. , you can find out who they are and what their addresses are by searching your debtor's registration at Companies House.
You must send the form to the A local court for civil (non-criminal) claims between people or companies. hearing centre where you obtained judgment on your debt (if your judgment was made in the Civil National Business Centre, send it to the A local court for civil (non-criminal) claims between people or companies. hearing centre closest to your debtor's home address – you can find out where this is on the government court and tribunal finder).
Make a copy for yourself and then call the court to find out whether you can file your application electronically, by post or whether you need to go down to the court office (and if so, whether you need to make an appointment to see someone).
You must prepare an A written sworn statement of evidence. using Form EX550 to provide details about when your debtor was Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules., whether or not you paid your debtor's travel expenses and how much of the judgment debt remains unpaid. See guidance notes: Step-by-step guide to form EX550. You must wait seven days after giving your debtor the order before you fill in and swear the A written sworn statement of evidence. to allow them time to ask you for travel expenses if they wish. If you asked someone else to To deliver or send documents to be used in court proceedings to someone in a way that complies with court rules. the order for you, they will need to swear a separate A written sworn statement of evidence. as well.
You will need to swear your A written sworn statement of evidence. in the presence of someone suitably qualified, which you can get done at any A local court for civil (non-criminal) claims between people or companies. hearing centre. Contact them first to find out if you need to book an appointment to see someone. You can also go to a solicitor or commissioner for oaths, but they are likely to charge you.
It is good practice to also attach your A written sworn statement of evidence. to a letter which clearly sets out when the hearing is due to take place. See our template cover letter to send to the court: Letter filing form EX550 at court.
You will need to pay a court fee of £67 when you file your application at court, which you can pay by phone with a debit or credit card or in person by cash, debit or credit card, or cheque payable to HM Courts & Tribunal Service. You may need to book an appointment to pay in person. The court may order that the fee is added to the amount already owed to you, but you have to pay it up front.
Your debtor is entitled to ask you to pay them a reasonable sum to cover their travel expenses to and from court. If they want you to pay travel expenses, they must send you a request within seven days of being Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. with the order to attend court, and you must pay these costs.
Yes. Once you have obtained a court judgment on a debt you are owed, you can ask the court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. (also known as enforcement agents) to collect the debt for you. This enforcement action should only be taken if you know or believe that your debtor has assets which can cover the value of the debt (see Q&A 57 for more information about how to find out about your debtor's assets).
You can ask the court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. to collect a debt you are owed at any time after your debtor has failed to pay up under the terms of the A command made by a court or a judge which requires a person to do or not do something. and before six years from the date of the judgment. Note that if no payment date is specified, the debtor must pay within 14 Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. of the date of the A command made by a court or a judge which requires a person to do or not do something. .
Court People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. or enforcement agents will give your debtor seven Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself.' notice to pay the debt. If no payment is made, they will have 12 months to seize your debtor's Physical items being sold. Distinguished from digital content and services, neither of which are physical items. (although you or the enforcement A person who acts on behalf of another (eg an employee or a solicitor). can get this extended for a further 12 months in limited circumstances).
An enforcement A person who acts on behalf of another (eg an employee or a solicitor). has the power to enter your debtor's home or workplace, or to stop them on the roads and seize money or Physical items being sold. Distinguished from digital content and services, neither of which are physical items. to sell at auction in order to pay you back the money you are owed. You should bear in mind that there are some restrictions on what Physical items being sold. Distinguished from digital content and services, neither of which are physical items. can be taken (eg they cannot take household items such as clothing or essential white Physical items being sold. Distinguished from digital content and services, neither of which are physical items., or necessary work equipment (eg tools or computer equipment) that is worth less than £1,350).
Once the Physical items being sold. Distinguished from digital content and services, neither of which are physical items. have been seized, the enforcement A person who acts on behalf of another (eg an employee or a solicitor). will try to sell them at auction for the best price they reasonably can, and they will use the proceeds to repay your debt, satisfy their own costs, and then return any leftovers from the sale to the debtor.
If you are owed less than £5,000, you can choose whether to ask the A local court for civil (non-criminal) claims between people or companies. or the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. to collect the debt (unless your judgment is for less than £600 in which case you must use the A local court for civil (non-criminal) claims between people or companies. People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt.).
While it is generally cheaper and more straightforward to apply to the A local court for civil (non-criminal) claims between people or companies., Official bailiffs for the High Court who can be asked to collect debts of £600 or more. generally have better collection rates (as they are only paid on successful collection) and can be much quicker at collecting payment for you.
You do not need a lawyer to do this, it is a form-filling exercise. You need to ask the A local court for civil (non-criminal) claims between people or companies. to give its People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. power to collect your debt. The paperwork that gives them this power is known as a warrant of control. To apply:
Fill in the application form
If your judgment was issued through Money Claim Online, visit their website, login and click on the 'Warrant' option on your Claims Overview page to request People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt. using the simple online form. You can also enquire through the HMCTS money claims enquiry service.
If your judgment was issued at a A local court for civil (non-criminal) claims between people or companies. hearing centre, fill in Form N323. See Step-by-step guide to form N323 for help.
Send your application to court (unless applying online)
Send three copies of the application and an official copy (ie a court produced copy) of the judgment to the court that gave the judgment along with a stamped, self-addressed envelope for your copy to be returned.
Pay the fee
You will need to pay a fee of £94 when you file your application. This fee can be recovered from your debtor along with the money you are owed.
When the warrant of control is issued, the enforcement A person who acts on behalf of another (eg an employee or a solicitor). will try to recover the money you are owed. If you do not hear anything within one month after filing the warrant at court, contact them for an update. Remember that you must immediately notify the court in writing if your debtor pays you back any or all of the debt while the warrant of control is in place.
If your judgment was given in the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court., follow the process in Q&A 70 below. If your judgment was given in the A local court for civil (non-criminal) claims between people or companies., you can have it transferred to the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. for enforcement if the debt is for £600 or more.
Start by choosing a A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. to enforce your judgment. The Official bailiffs for the High Court who can be asked to collect debts of £600 or more. Association contains a directory of authorised High Court Enforcement Officers. In most cases, you can contact your chosen In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. and they will help you to complete the necessary paperwork (called a transfer up service). You will need to provide them with details of your judgment and there is a fee of £80 payable to the court to grant the enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. authority to act for you.
If your A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. is successful in recovering the money you are owed, they will also recover their fee from the debtor (which will be a percentage of the debt's value). If they are unsuccessful, you will need to pay a compliance fee of £75 (plus Value Added Tax. A type of tax which is charged when goods or services are supplied to a person in the UK.).
You must immediately inform your A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. in writing if your debtor repays any or all of the debt.
If you are owed £5,000 or more, you can authorise a A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. to enforce the debt. You cannot choose to have A local court for civil (non-criminal) claims between people or companies. enforcement agents act for you.
Regardless of whether your judgment was given in the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. or A local court for civil (non-criminal) claims between people or companies. originally, start by choosing a A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. to enforce your judgment. The Official bailiffs for the High Court who can be asked to collect debts of £600 or more. Association contains a directory of authorised High Court Enforcement Officers. In most cases, you can contact your chosen In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. and they will help you to complete the necessary paperwork. You will need to provide them with details of your judgment and there is a fee of £80 payable to the court to grant the enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. authority to act for you.
If your A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. is successful in recovering the money you are owed, they will also recover their fee from the debtor (which will be a percentage of the debt's value). If they are unsuccessful, you will need to pay a compliance fee of £75 (plus Value Added Tax. A type of tax which is charged when goods or services are supplied to a person in the UK.).
You must immediately inform the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. Enforcement In a company: A legally defined term used to refer to the director, company secretary or managers of a company. Officers of a company have certain duties and responsibilities towards the company and can be held liable for company law breaches. in writing if your debtor repays any or all of the debt.
An attachment of earnings order requires your debtor's A person or business hiring one or more staff members. to take an amount from your debtor's earnings each time they are paid to repay the debt that you have a court judgment for.
Once an order is made, the court simply collects money from your debtor's A person or business hiring one or more staff members. each time they are paid, and pays that money on to you once any court and administration fees have been deducted.
See Q&A 72 and following for how to get an attachment of earnings order.
They are not always appropriate.
Attachment of earnings orders are only useful if:
you have a court judgment in your favour for more than £50 which has not been paid;
your debtor is an individual who earns wages or a salary (not self-employed); and
your debtor's outgoings are not more than their income (see Q&A 57 for more information about how to find out about your debtor's financial means).
Once you have an attachment of earnings order against your debtor, bear in mind that you will not be able to enforce your debt by most other means (eg instructing People authorised to enforce a debt by taking the debtor's property to sell it and pay off the debt.) without the court's permission, so you may wish to explore those alternatives first.
When you ask for an attachment of earnings order, if the court sees that your debtor has other debts (up to a total value of £5,000) it may decide to make an administration order against them instead. This means that the court will determine how your debtor's debts are to be repaid and the amounts of such repayments as between you and any other People or businesses to whom money is owed. and you will no longer be able to take any further enforcement action without the court's permission.
Before applying, ask the court in your debtor's home area to search the attachment of earnings index to find out if an attachment of earnings order has already been made against your debtor by another A person or business to whom money is owed. (see Q&A 75).
The process is as follows:
Fill in the application form
Use Form N337. See Step-by-step guide to form N337 for guidance.
Send your application to court and pay the fee
Send your application and fee to the Civil National Business Centre. The fee is £135 per debtor, which is usually added to the amount that you are owed if your application is granted. You can pay the fee by cheque payable to 'HM Courts & Tribunals Service'.
The court will send the application to the debtor for their response
After you have filed your application, the court will To deliver or send documents to be used in court proceedings to someone in a way that complies with court rules. it on your debtor who must either pay back the money owed or reply within eight clear days of being Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. (you will be sent a copy of any reply by the court). If you have not heard anything from the court after six to eight weeks, call them to ask for an update.
The court will make an order
Based on your debtor's reply, the court will determine how much (if anything at all) your debtor can afford to pay back and if an attachment of earnings order is made, you, your debtor and your debtor's A person or business hiring one or more staff members. will be sent a copy by the court. The court may also make a suspended attachment of earnings order if your debtor has indicated that they do not want the court to contact their A person or business hiring one or more staff members. and has agreed instead to make regular payments directly to you. In these circumstances, your debtor's wages will not be affected unless they fail to make the promised payments to you. See Q&A 76 for how to notify the court if the agreed payments are not made.
If you (or your debtor) are unhappy with the court's decision, you will have 14 Used for calculating time in law. Clear days are complete days but do not include: (i) the day on which the time period begins; and (ii) the day on which the period is stated to end. For example, the notice period for a shareholders' meeting would start the day after notice was received (or deemed received) and end the day before the meeting itself. after being Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. with the order to ask for it to be reconsidered. The court will then fix a hearing to reconsider the application, so it is sensible to instruct a lawyer to represent you at that hearing. Before you ask for reconsideration, consider whether it would be cheaper or easier for you to pursue a different method of enforcing your judgment.
Check this before you apply for an order yourself.
If there is one already, you can ask the court to join your debt with those already owed, and avoid having to pay the application fee.
To do this, fill in the top of Form N336 and send it to your debtor's local A local court for civil (non-criminal) claims between people or companies. hearing centre. You can find out where your debtor's local court is on the government court and tribunal finder. There is no fee payable.
If your attachment of earnings order is joined with another, the court will divide the payments received between you and anyone else who is part of it in proportion with the amounts payable under your judgments (once any administration or court fees have been deducted).
If at any time the payments stop, the court will follow up with your debtor's A person or business hiring one or more staff members., but you may need to take action first.
If you think that your debtor may have found new employment, or if they stop making payments direct to you under a suspended attachment of earnings order, you should fill in Form N446. See Step-by-step guide to form N446 for guidance. Send it to the relevant A local court for civil (non-criminal) claims between people or companies. hearing centre to ask for the attachment of earnings order to be sent to your debtor's new A person or business hiring one or more staff members. or for the court to otherwise investigate what has happened. There is no fee for this application.
If your debtor has savings or other money in a bank account in England or Wales, you can ask the court to freeze the money in the account and have it paid to you to satisfy an unpaid court judgment. This is known as a A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder. and is fairly rare compared to other methods of debt recovery.
See Q&A 57 for how to find out about your debtor's bank accounts. You can ask for a A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder. at any time after your debtor has failed to pay your A command made by a court or a judge which requires a person to do or not do something. .
Besides the costs of instructing a lawyer, you will also need to pay a court fee of £135 when making your application. These costs will usually be added to the debt you are owed if your application for a A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder. is successful.
Do not inform your debtor in advance if you are thinking of taking this action as they may move money out of the bank account that you plan to target.
You should use a lawyer to get a A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder.. The following is an overview of the process only; full coverage of A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder. applications is outside the scope of this service.
Applications for A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract. debt orders are made at the court where judgment on the debt was given (except if it was given in the Civil National Business Centre, in which case you should apply at your debtor's local A local court for civil (non-criminal) claims between people or companies. hearing centre).
The order is made in a two-stage process.
First, the judge makes an interim A court order requiring someone who owes a debtor money to pay it to his creditor instead. Usually, these orders require a bank or building society to pay money to a creditor of the account holder., which is sent to your debtor's bank. The bank temporarily freezes enough money to cover your debt, meaning your debtor can not withdraw or transfer it.
Second, the court holds a hearing for you and your debtor to attend to consider whether or not to make a final order. If the judge decides at the hearing that a final order should be made, it will provide for the bank to pay the frozen money over to you. This will be the amount of the judgment debt (or if there is not enough money, as much of the judgment debt as possible) and any of your costs that the judge has ordered should be paid by your debtor.
If your debtor owns property (either on their own or jointly with someone else), you could consider applying for a charging order over it to secure your debt. Charging orders operate in a similar way to a normal A loan (usually to an individual or individuals) to purchase a property, which is secured on the property. but with no repayment plan. They mean that when the property is sold, you can recover the money you are owed out of the sale proceeds, provided there is any money left over once any earlier mortgages are paid off. See Q&A 57 for how to find out if your debtor owns property.
It can take a long time for a charging order to result in payment to you.
Getting a charging order is the first step towards forcing your debtor to sell their property, but bear in mind that you may need to ask for a A command made by a court or a judge which requires a person to do or not do something. to force sale (if your debt is large enough to justify this).
You should also be aware that other charges already on the property (eg mortgages) will be paid first when the property is sold before any money comes to you.
You should not usually tell your debtor if you are thinking of making an application for a charging order as they may try to transfer their property (eg into a family member's name) to avoid it. This will obviously complicate matters for you.
You will need to pay a court fee of £135 in addition to the costs of your legal representation.
You can normally only recover a minimal amount of costs and expenses from your debtor, assuming your application is straightforward and successful: £110 towards your lawyers' fees plus the court fee and fees paid to the The statutory body which runs the official Land Register, on which the registration of all land is stored. to register your charge against the title of the property (usually minimal amounts).
If you want to apply for a charging order, you should instruct a lawyer to assist you. The following is an overview of the process only; full coverage of charging order applications is outside the scope of this service.
You can apply to the Civil National Business Centre (or the A court for claims between individuals or companies. It can hear high-value claims for the first time, or appeals against most claims that have already been heard in the County Court. if you are owed more than £5,000) for a charging order at any time after you have obtained a court judgment for your debt and it has not been paid when due.
In most cases, your application will be dealt with initially without a court hearing and without informing your debtor. If the court agrees with your application, you will be granted an interim charging order to secure the debt over your debtor's property so that you are protected whilst the matter is considered in more detail. A court hearing is usually set for your debtor to make any objections and the court to consider whether a final order should be made, or your application may be determined without a hearing.
If your application is successful and you are given a final charging order then you may be able to apply for an order for sale to force your debtor to sell the property and pay you what you are owed from the sale proceeds. In any event, your charging order will be registered at the The statutory body which runs the official Land Register, on which the registration of all land is stored. to ensure that your debtor cannot sell or transfer the property without you being informed.
You may reach a point where it would be more beneficial to your business to write off money you are owed as a bad debt rather than spending any more time or money pursuing your debtor. This may be because:
it has become clear that your debtor is not going to pay and the debt is of limited value and therefore no longer worth you pursuing;
you have received information to suggest that your debtor is Unable to pay debts as they become due., has very limited assets and/or has many People or businesses to whom money is owed. , therefore even if The inability to pay debts as they become due. proceedings were brought you would end up with little to no money; or
you want to preserve your relationship with your client and therefore writing off a bad debt in the short term may be beneficial to you in the long term.
Whether you choose to write of a debt you are owed is a commercial decision for your business, but bear in mind that any enforcement action you take to recover money you are owed must generally be taken within six years of the payment becoming late.
There are accounting and tax consequences to writing off a debt, which are outside the scope of this service and you should seek advice from an accountant on these aspects.
You can try but are not likely to be successful.
First, people are simply much less likely to pay old debts.
Second, you are usually barred from taking court action to pursue payments that are more than six years overdue. Ensure that you take any actions to enforce your debt within six years from the date on which the payment became late.