Step by Step Guide - Debt Recovery / Litigation United Kingdom
Click on a heading below to go to the appropriate pageLegal Entities
Knowing who you contracted with and seeking funds from is essential. Mistaking the type of legal entity could render your Judgement invalid or see an action raised against you.
Pre-action Protocol
Where the debtor is an individual (incl sole trader or an unicorporated partnership) and is within the English or Welsh jurisdiction, pre-action protocol is mandatory before issuing proceedings.
Letter of Demand
A letter of demand gives warning you are about to issue proceedings against debtor. A letter of demand encourages a debtor to pay within the prescribed period. Failing to issue a letter of demand may well impact on recovery of expenses.
Shortened Demand
Where the debtor is not an individual, a shortened demand can be issued to establish apparent insolvency (inabilty to pay sums as they fall due) for commencing insolvency proceedings.
Statutory Demand
Before a creditor can apply to petition for bankruptcy (England), sequestration (Scotland) or the appointment of a liquidator they must serve a statutory demand on the debtor in a prescribed form.
Litigation (England & Wales)
A civil action may be raised in the County Court or the High Court, subject to monetary limits
Litigation (Scotland)
A civil payment action for debt recovery may be raised in the sheriff court, or if the sums sued for permits, the Court of Session.
Enforcement (England)
Once a judgment is granted, various methods of enforcement are available to recover the sums due.
Diligence / Enforcement (Scotland)
Once a decree is granted, various methods of diligence are available to enforce the decree and recover the debt due.
Liquidation
A winding-up petition will be lodged with either the County Court or the High Court in England or the sheriff court or Court of Session in Scotland, dependent on the paid up share capital and registered office address, seeking the appointment of a liquidator.
Bankruptcy (England & Wales)
To petition for an individual debtor to be sequestrated (declared bankrupt), various requirements must be fulfilled, subject to the debtor not being subject to a DRO or an IVA.
Sequestration / Bankruptcy (Scotland)
To petition for an individual debtor to be sequestrated (declared bankrupt), various requirements must be fulfilled, subject to the debtor not being subject to a Debt Arrangement Scheme (DAS), a Trust Deed or a Moratorium.
Debt Relief Order / Individual Voluntary Arrangement (England & Wales)
Forms of insolvency that avoids bankruptcy.
Trust Deed / Debt Arrangement Scheme (Scotland)
Forms of insolvency that avoids bankruptcy.
Administration
Administration may be used to rescue a company and achieve a more desirable outcome for creditors. It allows a company to trade for a period, protected from it's creditors.
Receivership
Usually appointed by a lender on default, with required security.
The content of this website is for general information only and should not be relied upon. It is not intended to be construed as legal advice and should not be treated as a substitute for specific advice.