What sort of things should I consider before commencing court proceedings for a debt recovery claim?

Far too often parties commence Court proceedings when one of their invoices has not been paid without giving sufficient thought to the matter.

This article looks at some of the matters you should consider before embarking on Court proceedings.

Who is my claim against?

Before commencing Court proceedings you should satisfy yourself as to who your claim is against. This may sound like an obvious point. However, a surprisingly large number of claims are brought against parties who have been incorrectly named. Quite often this is because businesses often operate under a trading name and it is not immediately clear what the legal status and correct identity of the business is. On other occasions confusion may arise where the name or legal status of a party has changed.

You should, therefore, ask yourself whether your claim is against an individual, a partnership, a company or some other type of organisation and whether you know the correct and full name of that party.

In the case of limited companies and limited liability partnerships basic information can be obtained from Companies House free of charge. This may, for example, help in clarifying the correct name of a party or checking when a company was incorporated.

If a claim is brought against the wrong party or a party who has been incorrectly described you may end up needing to amend the claim and re-serve the Court documents. This could be a costly process.

Will my debtor be able to satisfy any judgment I obtain against them?

If your debtor does not have the money to satisfy any judgment you may obtain against them there is little point throwing good money after bad.

If you do not know what assets your debtor has or you have concerns as to their financial position it may be worth making further enquiring before embarking on Court proceedings. Carrying out a credit check is one way of doing this.

If your debtor is a limited company you may wish to check with Companies House that the company hasn’t been dissolved, placed into liquidation or administration or struck off. It is also possible to check with Companies House whether the company has filed its accounts and annual return on time. If they have not this may be a sign that the company is in financial difficulty. This information can be obtained free of charge. Copies of any accounts and annual returns filed with Companies House can be obtained upon payment of a fee. However, you should bear in mind that a company’s financial position may have changed since such documents were filed.

In the case of individuals you may wish to obtain “office copies” from the Land Registry for the property they live at. There is a small charge for obtaining these. The office copies will confirm whether your debtor owns the property, whether there are any outstanding mortgages or charges on the property and when it was purchased. In the case of properties purchased after December 1994 the office copies will also show the price paid for the property. The office copies will not tell you how much is outstanding on any mortgages or charges.

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For more information on:

  • Can I prove my claim?
  • What will court proceedings entail?
  • Are court proceedings the only answer?