Debt Recovery and Legal Action: Guidance Notes and Legal Documents
In an ideal world, transactions would proceed smoothly and payment would be made on time. Unfortunately this is not always the case!
The documents provided in this folder are simple to use, effective and professionally drafted. The templates aim to provide businesses with the tools they need to deal with late payment by customers.
The process should start with reminder letters and progress to attempts to settle. If payment is still outstanding, a business has various options including mediation, arbitration, service of a statutory demand and legal action. Our ‘Guidance Notes: Debt Recovery and Legal Action’ give an overview of the debt recovery process (including reference to debt respite legislation which protects debtors against debt collection in certain cases).
Available in a Microsoft Word format, these templates are designed to be simple to use and flexible.
Please click on the links below to view details of the available documents.
Debt Recovery and Legal Action: Guidance Notes and Legal Documents is part of Business . Just £38.50 + VAT provides unlimited downloads from Business for 1 year.
Frequently Asked Questions
A customer has not paid. What are my options for getting the money? +
Work through it in stages. Start with reminder letters, then try to agree payment, for example a repayment or instalment arrangement. If that fails, options include mediation or arbitration, serving a statutory demand or taking legal action in the County Court. The Guidance Notes in this folder give an overview of the whole process and point you to the right document at each stage.
Can I charge interest and costs on a late commercial payment? +
Usually yes for a business to business debt. You can charge statutory interest of 8% above the Bank of England base rate, unless your contract provides a different rate, plus fixed compensation for the cost of recovery. The fixed sum is £40 for debts under £1,000, £70 for debts of £1,000 up to £9,999.99 and £100 for debts of £10,000 or more. These can be added to what you are owed.
What is the Breathing Space debt respite scheme, and does it affect chasing a debt? +
Breathing Space is a debt respite scheme for individuals in England and Wales. When it applies, the debtor gets a 60-day moratorium during which most enforcement action, interest, charges and creditor contact must stop. It is started through an FCA authorised debt adviser or a local authority, not by you. If a debtor is in a Breathing Space you must pause recovery, so check before chasing an individual. It does not cancel the debt, which remains payable afterwards.
Does it matter whether the debtor is a business or an individual? +
Yes, it changes the route. Against an individual, including a sole trader, you should follow the Pre-Action Protocol for Debt Claims before court, and the Breathing Space scheme may apply. Insolvency routes also differ: a statutory demand can lead to bankruptcy for an individual who owes £5,000 or more, or to winding up for a company that owes £750 or more. Identify the debtor's status early, because it shapes what you can do.
What form do these debt recovery documents take? +
The templates are provided in Microsoft Word and are designed to be simple to use and flexible, so you can edit them for your situation. They cover the stages of recovery, from reminder letters and settlement through to repayment agreements and legal action letters and court forms. The Guidance Notes tie them together and explain when to use each one.
