19 May 2020 / Back to latest updates

Top 5 Tips for Debt Collectors attempting collection of an unpaid debt during COVID-19

  1. Ensure written confirmation of the debtor’s proposals for payment; this ensures you have acknowledgment of the debt if the debtor at a later stage tries to dispute it;
  2. Try to resolve disputes with debtors now to avoid a lengthy court process or hefty court fees at a later stage;
  3. See if the debtor is stating they are unable to pay you due to COVID-19 reasons; request their written reasons and supporting documents such as a copy of their recent bank statement, letter from their accountant or evidence that they have applied to the Government for financial assistance.
  4. See if the debtor is able to provide you with additional securities for the debt such as a guarantee agreement from the director(s). We are happy to prepare the agreement for you and our Corporate team can advise further.
  5. Make use of any Retention of Title clause you have to the goods – you might be able to make use of this if the debtor has entered into some form of insolvency – contact us for further information.

Frequently Asked Questions

Q. If a debtor does not respond to my LBA are the Courts still accepting new claims?

A.  Yes, Creditors are still able to issue claims through the Money Claims Online portal or the County Court Money Claims Centre (CCMCC).There is a 17 working days turnaround time by the court to issue a claim. Once the claim is issued the debtor will have 14 days to respond to the claim by paying the debt or defending the claim. If there is no defence or payment of the claim then the court will issue a judgment for the Creditor. Some hearings are being held remotely.

Q. Are there alternatives to court proceedings?

A.  Yes insolvency proceedings can be issued by issuing a statutory demand for the Debt. This is a formal demand for payment and often a pre-requisite for bankruptcy proceedings or issuing winding up petition. A statutory demand can only be issued for a debt over £5,000 for an individual or £750 for a company. If there is no response within 21 days to the statutory demand being served then you are able to issue a winding up petition against the company or a bankruptcy petition against an individual.

The Government has issued guidance that insolvency proceedings cannot be used for a debt that relates to unpaid rent arrears or if the debtor claims they are unable to pay due to COVID-19 reasons. For other petitions the court will review the petitions before issue but these should proceed as normal. If we can assist further with this please let us know.

If you require any advice or have any further questions in relation to the above please contact our experienced team by sending our team an email and it will be picked up shortly.