Jodie Walmsley of Coodes Solicitors’ Personal Disputes team, explains the steps you can take to recover the debt, using the Small Claims Court Procedure.
Unfortunately, many of us will occasionally find ourselves in the difficult situation of being owed money. It could be the company you were dealing with went into administration, or you weren’t supplied with goods you paid for. Perhaps you loaned money to another person who has failed to repay or you are a sole trader who is owed money for work you have carried out. In all these circumstances, the Small Claims Court Procedure can be utilised. Whether you are owed money by an individual or a company, the Small Claims Court is used for claims where the debt does not exceed £10,000. It is designed for an individual or a company to handle the claim themselves however advice may be sought where needed.
We often get enquiries in relation to debt claims which are below £10,000. This guide sets out what you should take into consideration before lodging a claim and what you can do if you require assistance.
The Small Claims Court is designed for individuals or companies representing themselves. This enables costs to be kept to a minimum, but there are fees involved:
If you choose to lodge a claim, you as the Claimant need to prove you have a genuine claim should the claim go to a final hearing before a Judge. You need to establish whether you have a genuine claim from the outset. It may be helpful to ask yourself the following questions: Do you feel that you have a strong case that you can document with supporting evidence? Do you have a contract with the debtor for the unpaid sum? Do you feel you have been genuinely wronged?
You should be aware before bring a claim in the Small Claims Court that there is very limited scope in recovering costs in bringing the claim or associated solicitor’s costs.
Should you be successful in your claim you may well recover the Court Fees on top of the judgment debt. However, solicitor’s costs are not usually recoverable save for some limited fixed fee nominal costs.
The Defendant will be notified of your claim. They will choose whether to accept the debt and make the payment or to defend. If they accept that the debt is payable that is unfortunately not the end of the case. The Defendant will return the necessary paperwork to the Court and the arrangements for payment will then need to be agreed or the amount to be paid negotiated.
If the Defendant defends your claim, they will have 28 days to respond (if they acknowledge the claim within 14 days of receipt). The Court will then issue what is known as a Directions Questionnaire, which will give specific steps for the parties to adhere to in a specified time.
The Court allocates the claim based on the information received and issues a Notice of Allocation to the parties, stating how to prepare for the final hearing. At this point the parties are offered free Court Mediation to try and resolve the dispute before a final hearing takes place.
Unfortunately, this may happen even if you have obtained Judgment against your debtor. This means you will have to take steps to enforce the judgment in order to be repaid the debt. There are a number of ways to do this, including using Court Bailiffs to collect the money, freezing the assets of the debtor or putting a charge on any assets or money. All of these options involve further steps to be taken and further Court fees.
You will need to consider whether the amount of your claim will exceed legal fees. However, if you are thinking about instigating a claim, or have had a judgment obtained and want to know the best route to go down next, it may be advisable to attend an initial appointment with a specialist lawyer. This will allow you to discuss options and find the best way forward to give you clarity and peace of mind.