Judging whether to pursue a debt through the courts

A debtor owes your business money and you need the debt paid. Of course you do and so you should. Not only do you need to get the debt paid as your business may well need that money for cashflow but you also want the debt paid. This is the psychological element of any dispute

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A debtor owes your business money and you need the debt paid. Of course you do and so you should. Not only do you need to get the debt paid as your business may well need that money for cashflow but you also want the debt paid. This is the psychological element of any dispute which makes the whole issue even harder. Let’s face it, no one likes feeling they’ve been made a mug of.

One of the commonest and most difficult issues arising in the above scenario is explaining to a client that they need to think clearly before starting legal proceedings. There is simply no point in throwing money at pursuing a debtor if the odds are that you aren’t going to get your money back, judgment or no judgment (see here on enforcement of judgements).

It is a common misconception that a County Court Judgment (CCJ) will result in definite payment. In many cases expensive further action such as bailiffs, attachments of earnings, threats of insolvency are needed and in other cases, the debtor simply doesn’t care if he, she or it has a judgment against them. They may already have other judgments, and this is something that it would be foolhardy not to check before spending money on litigation.

Below is an excellent infographic on the sensible way to approach these kinds of situations. It is from the US but the basic principles are the same in this country and I think it’s a useful reminder for future reference. I hope you agree.

Should You Sue Your Customer?
David Rosen – Head of litigation and specialist in fraud law

If you have a debt recovery problem or the possibility of a litigation issue, get in touch with me for a discussion as to how I can help.

David Rosen • Disputes

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