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Debt Collection at Humphries Kirk

| Published on April 16, 2018

Debt Collection at Humphries Kirk


Bad debts damage cash flow and if uncollected, may affect a company or individuals’ profitability.  The task of recovering outstanding money need not be onerous and the debt may simply be an oversight, misunderstanding or the debtor may simply be not be taking debt recovery efforts seriously.

A new Debt Protocol was introduced on 1 October 2017 and applies to individual debtors or sole traders.  The Protocol’s aims are to resolve the matter without the need to commence Court proceedings.  Whilst communication between the parties within the debt process may be more lengthy initially, if the settlement can be achieved amicably or without entering the Court process it may be beneficial to those concerned and existing relationships may be maintained.

The legislation promotes the early exchange of information between the creditor and the debtor to assist in the early identification of a potential dispute.  Mutual understanding of the problem may enable the early settlement of debt claims and a more economic process without the need for issuing court proceedings. Parties are encouraged to act reasonably and in a proportionate manner throughout.  In order to try and avoid proceedings or support the efficient manner of proceedings the parties can utilise Alternative Dispute Resolution.  A mediator would assist in the clarification of issues and negotiate between the parties in an attempt to settle the claim.

The debt process is commenced by the creditor on their sending a letter before claim and a Reply Form to the debtor.  The letter should provide details of the debt, interest or charges accruing on the debt, background to the debt and the agreement reached between the parties.  The debtor has thirty days to respond and should complete the relevant sections of the Reply Form when responding, and include any requests for copies of documents and/or raise other queries.  If a debtor’s proposal is considered reasonable by a creditor, a payment plan may be arranged and a legal settlement achievable.  If the agreement is not adhered to by the debtor, court action may become necessary.

The process may be more straightforward and cost effective if all paperwork and conversations are noted by the Creditor so the debt may be proven.  Creditors have six years from the date of the outstanding invoice to commence the recovery process though dealing with this early may bring a more productive result. It might be easier to ignore debts but the debtors will profit at your expense and if debts are not chased early on, the debtors may move to another area or disappear and memories will fade.

Whilst this new process does not apply to commercial debts, a new complaints scheme has been introduced by the Government to help small businesses resolve payment disputes.  Larger companies often delay paying their suppliers to improve their own cash flow and financial position and smaller businesses are left without payment for some time.  The Small Business Commissioner has suggested a check, chase and choose approach.   If the small business has checked the unpaid invoice contains the correct information, has been sent to the right person and has been received and has chased the overdue payment effectively, including contacting the customer to advise interest will be payable and supplies will be postponed until the invoice is paid, they may choose to  take further action such as negotiating with the customer or submitting a complaint to the Commissioner.  The Commissioner may become involved if the invoices are at least twelve months overdue and the supplier has made all attempts to resolve the matter.  It may take a case worker four to six weeks to resolve the complaint.

To learn more about Humphires Kirk debt collection services, please visit their website www.hklaw.eu.

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