Costs for Debt Recovery
Outstanding invoices and payments can have a detrimental impact on your cash flow and business stability. At Kidwells Solicitors we understand that firm and quick action is key in all debt recovery. Whatever the amount.
If your business is owed payment and you want to find out more about how Kidwells Solicitors could help recover debts owed to you, contact us at 01432 278 179 for a confidential chat or email firstname.lastname@example.org
How long does debt recovery take? What are the stages?
The time involved at each stage will depend on a few factors, including the responsiveness of third parties.
Once we have been instructed to recover your debt, we will discuss the details of your claim and review any relevant documentation. The best course of action will depend on the circumstances, such as the size of the debt and the opponent involved. Where appropriate, we will write the initial letter of claim to notify the debtor that we intend to recover the debt.
If the opponent is an individual, they will have up to 30 days to reply to this initial letter, in some cases, 14 days can be given as the deadline and in some cases, they also have the right to extend this by another 30 days. If the opponent is a company, they have 7 days to respond and aren’t able to extend the time.
After the initial notification letter has been sent to the opponent, if there is no response or they don’t admit to owing the debt, you can instruct us to proceed to Court proceedings.
When we apply to the Court, we will complete and submit a claim form on your behalf. We will then receive the issue number, as well as the notice of issue, and the date when proceedings were served against your opponent. This stage can take up to 8 weeks, subject to the Court, and the opponent then has 14 days to respond to the claim and 14 days thereafter to File their defence with the Court.
Court judgment will lead to one of two outcomes. If the opponent will admit to the debt, the Court would make a judgment for payment and we would then write to the opponent requesting payment. If the opponent does nothing, the Court would make a default judgment.
In this third stage, if payment hasn’t been made, there are several enforcement proceedings that could be considered. This would mean the matter would take longer to resolve. We would discuss the options with you to pursue the best course of action.
How much does debt recovery cost?
Our legal team works on an hourly rate basis. The standard hourly rates are between £110 to £350 excluding VAT, depending on the person instructed. Legal fees attract a VAT rate of 20%. It’s difficult to give an exact rate, but we’re able to advise on typical costs below. For a better idea of costs for your circumstances, please call us at 01432 278 179 and we can advise.
Our hourly rates for single debts to be recovered are £110 to £350 excluding VAT. The amount of time spent will determine the cost of recovering your debt. The minimum rate is one hour.
For Pre-Action, for example, the fee is likely to be one hour of work at the hourly rate.
If Judgment is required, this stage would likely cost 2-3 hours of work at the hourly rate. Disputed claims are likely to increase this amount of time. Court fees are also determined by the value of your claim, with fixed issue fees up to £10,000, or for claims above that amount, 5% of the claim value. Please see the chart below.
|Claim amount||Court issue fee|
|Up to £300||£35|
|£300.01 to £500||£50|
|£500.01 to £1,000||£70|
|£1,000.01 to £1,500||£80|
|£1,500.01 to £3,000||£115|
|£3,000.01 to £5,000||£205|
|£5,000.01 to £10,000||£455|
|£10,000.01 to £200,000||5% of the claim|
VAT does not apply to Court fees.
These court issue fees would be on top of our hourly rate. The costs on issue of a claim (up to a maximum of £100 and not including the VAT element), and the Court fee, are generally added to the amount claimed and are recoverable from the Debtor. The costs on entering Judgment are again (save for the VAT element) typically added to the debt and are recoverable from the opponent.
If you have a bulk of regular recovery instructions, at least 30 a month, then we may be able to offer a bespoke pricing package based on your requirements. Please contact Michael Horne, Solicitor, at 01432 278 179 for more information and to discuss the details.
After proceedings are issued, your opponent may dispute the claim and make a counterclaim. This would mean additional fees would apply as there would be more time involved, charged at our hourly rate. We would keep you informed at all times throughout the process.
What does the hourly rate include?
Our hourly rate encompasses the time spent on your behalf, excluding additional expenses which are detailed below. Prices are excluding VAT. Legal fees attract a VAT rate of 20%. This hourly rate includes meetings with you and perhaps other authorised persons on your behalf; reading, preparing and working on papers; making and receiving telephone calls, emails, faxes and text messages; preparation of any detailed costs estimates, schedules and bills; and time necessarily spent travelling away from the office on your behalf.
And specifically in the case of debt recovery, our hourly rate includes:
- Taking your instructions and reviewing documentation
- Undertaking appropriate searches
- Sending a letter before action
- Receiving payment and sending onto you, or if the debt is not paid, drafting and issuing claim
- Where no Acknowledgment of Service or Defence is received, applying to the court to enter Judgement in default
- When Judgement in default is received, writing to the other side to request payment
- If payment is not received, providing you with advice on next steps and likely costs
Expenses on top of our hourly rate can include, but are not limited to:
- rail and air travel charged out at cost and travel by car is charged at a flat rate of 45p per mile;
- car parking; and
- the full cost of overnight accommodation if required.
Any applicable expenses would be discussed with you before they are incurred.
What are the possible third party costs involved?
Please note that payments due to other third parties, known as disbursements, are not included in our fees. These disbursements include, but are not limited to: Barristers, Experts, and Court Fees. If an Expert or Barrister needs to be instructed you will be provided with a list of quotes for your approval prior to engaging their services. We will request monies on account to pay for their services if required. You will be notified of any other disbursements before they are incurred and asked to make payment on account.