Small Claims court - cost & process

Martin Interesting to read your post. We have a similar situation. We have 2 unpaid debts; one is over £6k but one is under £40. I'm intending to persue both with equal vigour through the Courts Online service. I believe that if cases are won, costs can be awarded against the debtor - can anyone confirm this? Anyway, even if we lose out financially on the small debt, I feel it is worth setting out our stall as a company who chases all debt - I'd hate word to get round that we are a soft touch! Regards Aidan

Aidan Dont quote me on this, but I believe you can only use the small claims court for bad debt up to £5k I have used this method many times in the past all successfully. It cost me approx £250 each time, but that gets added onto the customers debt and they get forced to reimburse you anyways [] good luck Trevor

Rather than go straight to the small claims court, you should have your solicitor write a letter to them to put the frightners on them. Usually upon the threat of legal action most people will comply and pay up or return the goods. It rarely ever gets to the court stage - especially for low amounts. One thing to consider though, is that it may well cost you more than £40 for your solicitor to write a letter for you! Small values normally never justify big actions in my opinion so I agree it's a bit of a difficult one. Clem.

You could try Sue at limeone for a low cost legal letter (£10 I think). limeone.com I would always do a "letter before legal action" as this can have good results. Re the courts i have used the small claims courts quite frequently in the past when working in industy, the main problem is that if the person you are claming against already has an outstanding CCJ (county court judgement) against them it is highly unlikely that they will pay even if you win. Enforcement can prove expensive and often ineffective if the person in question is a serial debt dodger. Ie if the debtor knows how to play the system it is largely ineffective - if it is an honest person with a mortgage etc they won’t want a CCJ as their credit rating will be ruined and the mere threat is often enough. This comes back to the whom you give credit to – if you credit check people upfront and they have CCJ’s, its cash on delivery or no trading as you know they are going to be difficult. Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Cheers for the comments all. Clem, as you say solicitors cost the earth - especially for small actions and are therefore not a consideration here! As for credit James. It's a diffcult one. We do not offer credit until WE are happy with the customer building up a trading history WITH US - sod everyone else! Our terms ensure we have yet to be burned from a customer buying quantites. However, these are samples, and are sent out for evaluation/consideration, but they are fully re-saleable products, not parts or worthless. As mentioned we deduct this from the first invoice, but are loath to start to charge for samples as it will obviuously put people off and the more potential customers we can get our produtc in front of, the more chance we have of building a new business relationship. However, we will not be taken the pee out off! There are (sadly) too many "fly by nights" pretending to be in business at the moment, and if we were to allow 10 "customers" to rip us off for £50.00 at a time, then it soon starts to add up. Anyway, at the end of the day, it's stealing, and (assuming it makes sense) we will not accept it! As an aside, where is the best place (pref online) to do credit checks?
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Kind Regards,

Martin @ LTA Leisure Ltd

enquiries@lta-leisure.co.uk

You could try experian.co.uk, I got my own one from there a few years ago. Makes for very interesting reading. Well worth the two quid, My family weren't so keen though as I could see any debts they had.

Experian are the market leaders and pretty decent, there are plenty of other around too. I see where you are coming from Martin re non-payment, but I think you may have to accept that some will go astray and build this into your cost structure. I don’t know what exactly you are sending out, but it is inevitable that some people just wont send back a sample item or refuse to pay to keep it. Its then a question of management time – is chasing this small debt worthwhile? Or should I be concentrating on getting other business? Its a tough call, and you certainly don’t want to be seen as a soft touch if this is a consumer item, but dont want to spend hours chasing £50 when you could be chasing a sale. One other option would be to use a debt collection agency to do all the leg work, while you get on with something else.
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

A bit out of touch (2 yrs) on the small claims court procedures. However used it many times the only time it didnt work with bona-fide businesses was if they were going under and had nothing left in the pot. We never needed to have a solicitor write to them, just specified on our own letter head that court action would be taken in x number of days. When that day came we filled in the form for the SCC and faxed it with a cover letter saying that it would be going in the post at the end of the working day if money was not in our hands before that time. All our customers were within 25 miles. 1 or 2 irricoverable debts in 12 years, and we always processed it wheather it was £25 or £10000. If you fail to process they dont believe you mean it next time.
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Andy Seabrook
One of those who are virtually energetic!
www.virtualenergygroup.co.uk
www.landraiders.com
www.blueorchidbride.com

Small claims court is for claims under £5K and the fee is proportional to the amount claimed. You can claim the fee back and the interest to the date of judgment but will have to convince the judge of other claims for costs in addition to the invoice total, the discretion for ordering other add ons rests with the judge to allow. For most claims you need to know the ability of the person to pay and in most cases a good debt collection agency will be able to achieve the same result with a phone call, fax or letter. Procedure for claiming is straightforward and can now be done on line but it is a requirement to collect the debt via court that you write to the debtor first and inform them of the impending court application. Once the debt is over £750 then there are other options open to you for debt collection. A county court judgment is great but then there are additional costs of collection. Every method of enforcement comes with more fees that have to be paid up front and then added to the debt. We do debt collection for upto three calls by phone or a fax or a letter to the debtor for £10 plus VAT. The fax and letter option can be upgraded to also include a courty court summons copy for the debt amount for an additional £5. This is over 95% effective in getting payment.
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550

We are also able to help if needed. Regards Darren
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Darren
DCI - Outsourced Credit Control
www.debtchase.com

Credit checking can be done online with Experian. If you open an account with them they will agree a monthly minimum commitment and you will receive discounts on the searches. Approximate costs ar as follows (depending on the level of detail required): Ltd company: £18.00 per search Non-Ltd: £1.80 per search Hope that gives you a rough idea of the costs to do credit searches with Experian. It's all down to what you agree with the sales chap that will visit you to setup the account.
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Jamie
www.TamarTelecommunications.co.uk">href="http://www.TamarTelecommunications.co.uk">www.TamarTelecommunications.co.uk

I manage a low cost and successful debt recovery service at Etheringtons Solicitors that makes it economic to bring a small debt claim. Alternatively, you may wish to read my book "Give Me Your Money - A guide to debt recovery". For details, visit: www.reevespublishing.co.uk Anthony Reeves