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Debt Recovery- A Practical Guide

It can often feel both frustrating and time-consuming chasing people and businesses for money they owe you. Furthermore, the hassle of writing or phoning to ask for this money can be daunting to most people. The cost of trying to recover money owed can also have a costly impact.

Debt Recovery

In every business, it is vital to ensure that the cash flow remains healthy, to allow for the continued growth of your company. Delays to payments for services can have significant negative consequences on your business and therefore it is important for business to have a basic understanding of the numerous routes available for debt recovery.

Below are just a few of the common steps available for debt recovery:

Letter Before Action

Raising a court action is not always necessary when it comes to debt recovery. Often, opening up a clear and understandable dialogue with your debtor can prevent unnecessary time and money being spent at court.

It is very common to send a ‘Letter Before Action’ to your debtor before starting any legal proceedings. The letter will tell the debtor how much they owe and how long they have to make a payment before further action is taken. The cost for this letter can vary and it is best to contact one of our specialist debt recovery solicitors to discuss your individual circumstances, following which they will be in a position to indicate the best course of action and the costs involved.

A Letter Before Action is often a successful means of recovering a debt within a reasonably quick timeframe. However, where a Letter Before Action is ignored, or does not result in the debt being repaid, other means of recovery are available.


There are circumstances where you might learn of your debtor’s financial difficulties. In such situation it might be best to consider a fast-track collection to ensure your debt can be recovered.

A fast-track collection involves a statutory demand procedure and it is normally available for individuals and limited companies. In order to be able to use this service, it is necessary to provide as much supporting evidence as possible for the debt, such as an invoice or a statement of account.  It is also vital that the debt be undisputed.

If you decide to proceed with this option, a formal demand will be prepared for insolvency or bankruptcy and a sheriff officer will serve this notice on your debtor.  If there is no dispute in respect of the debt within the period of 21 days after service, insolvency proceedings will begin.

If this method is ineffective, you might wish to consider a court action.

Court Action

Raising court proceedings may That being said however, if someone owes you money, it is then very likely that they will owe money to other creditors too. Thus, the earlier you start court proceedings, the better chances of getting paid.

Having checked your debtor’s financial situation and assessed if they will be able to pay you if the judge rules in your favour, your team of solicitors will be in a position to advise you whether it is worthwhile pursuing them for the money. This will then ensure that you the time and money spent pursuing the debt is your worthwhile.

Court Action

Judgement Enforcement

There are a number of options available to you if your debtor has assets available. 


An arrestment order is a very effective method of ensuring that your debtor will not get paid directly for potential income such as any shares they may have. Instead, the money due to your debtor can be used to repay your debt and any other outstanding debts.


Sometimes if your debtor finds themselves in a difficult financial situation, they might want to sell or transfer their property to increase their financial assets.  Inhibition prevents such action being taken. In addition to this, it will ensure that your debtor will not be able to take any loans out against the properties they own.

Earnings Arrestment

Another option to recover your debt would be to obtain an order from court instructing the debtor’s employer to pay a regular amount of money every month from their salary to you, until their debt is cleared. That being said however, this option is only available if your debtor is an individual and their employer is known to you.


Insolvency can be an effective method and often the only option available to you if your debtor cannot repay you the money. There are two types of insolvency services, namely liquidation and bankruptcy.


The latter method is available to creditors such as individuals, sole traders and partnerships with a debt of at least £3,000. If your debtor is declared bankrupt, their estate is passed to a trustee whose task will be to sell the debtor’s assets in order to repay creditors.

The process of bankruptcy is a preparation of a bankruptcy petition which is then sent to court for further process. Once the petition has been processed, it is served on the debtor.


The former method is available for limited companies and the debt has to be over the sum of £1,500. Liquidation is used when a debt cannot be repaid and the final option in such circumstances is to liquidate a company.

Liquidation process involves a preparation of a petition for the appointment of a provisional liquidator. Following this, the provisional liquidator will attend an assessment of the debtor’s company premises and a decision will be made whether it is worthwhile taking the process of liquidation further.

If a petition for liquidation is granted, the debtor’s company might be able to pay the debt following which a petition to court will be dismissed. If on the other hand, they are unable to pay the debt, it will be necessary to proceed with the process of liquidation.

Whatever your business circumstances are, at Jones Whyte we understand that recovering debt from debtors is vital to the success and healthy growth of your company. Our team of specialist debt recovery lawyers have vast experience in dealing with debtors and will act quickly to ensure your interests are well looked after.

At Jones Whyte, our commercial litigation department are fully equipped to deal with your enquiries and questions regarding debt recovery. To discuss you case with one of our specialised solicitors, call our team today on 0141 375 1222.

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