An Expert Guide To Chasing Old Debts

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Chasing Old Debts

The pace of business and personal life moving at breakneck speeds. With this in mind, it is very easy for people to accumulate a backlog of money that is owed to them.

If this is left idle for too long, the debt may become “statute barred”, or “prescribed” in Scotland. In England and Wales, once the six-year limitation period has passed, it may be too late. If a debt is statute barred, it can no longer be enforced.

This shows that it is important to recover a debt as soon as possible. If your clients stop paying, then it can cause a lot of problems. It is critical to ensure that your cash flow is stable and growing. Without it, both businesses and private individuals will struggle.

Do you have a large debt portfolio? If so, you may be unsure of the most effective way of making sure that your debtors pay the debt. We asked our debt collection experts to provide advice on the best way of chasing old debts.

Chasing Old Debt – Type of Debt

There are several main types of debt. The method of chasing old debt is similar for each type. However, understanding the type of debt you have can help to find the best solution.

There are many professional solutions available, and finding a specialist debt collector can often be the best option.

Commercial Debt

If a business is owed money, this can be classed as a commercial debt collection. It is very common for a business to be owed money from unpaid invoices or payment disputes.

Most businesses will have a record of every transaction in the form of normal office paperwork. This could be an invoice or a receipt, for example.

For debts in this category, a specialist business debt collection agency is recommended.

Private Debt

A personal debt occurs when a private individual is owed money. This could be money owed from a company or another individual.

An example of this could be if they have loaned money to a friend or family member. This is commonly to cover those in a difficult financial situation. Examples of this include a mortgage shortfall or perhaps even to cover repayment of another debt.

Specialist private debt collection agencies are the best option to recover a private debt. More expensive options such as a court order and legal action can be too expensive for private individuals. A debt collection agency provides a similarly effective service for a low cost.

International Debt

International debt is simply when someone in another country owes the debt. This can be either a private debt or a commercial debt.

It is important to seek the services of a professional international debt collection agency when chasing old debts like this. Every country has its own way of dealing with debt. For example, some countries have longer time limits on debt recovery than others do. A debt collector that understands these factors is the best option for enforcement.

Chasing Old Debts – Statute Barred

Before starting the process of debt recovery on older debts, you should always seek professional debt advice. Before paying for enforcement action, you need to know if the debt can be recovered or not.

In the UK, there is a limitation period of 6 years where a debt recovery can be enforced. However, if there is an acknowledgement of the debt within that time period, the limitation goes from this date instead. This might be an email confirming the debt’s existence, or even a partial payment.

Many people and businesses might incorrectly assume that because their debts are old they cannot be recovered. This is not always the case, and every case should be investigated before writing it off. If you do chase after old debts that are statute barred, you could end up receiving a debt collection complaint.

Our award-winning partners will provide a free pre-action appraisal of all debts. This will assess how likely it is for the debt to be collected.

This can save a lot of wasted time and money. Some agencies will take a debt on knowing that it cannot be collected. This is simply a way of locking clients into long, lifetime contracts.

Chasing Old Debts – What Can You Do?

After you establish that debt can be collected, you should take time to consider enforcement options.

A professional solution, such as a debt collection agency, will always be the preferable choice. However, there are certain steps that both businesses and private individuals can take.

Gather Evidence of the Debt’s Existence

Before beginning the process of chasing old debts, it is crucial to gather up all information relating to the individual case.

For example, a commercial debt should have an invoice or written records of the agreement such as a contract or receipt. It may possibly even have documents such as a cheque. In some cases, payment terms may also exist.

For private debts, written documents are often harder to come by, as most agreements are made verbally. Despite this, you should always speak with a professional debt collection agent to see what can be done.

Speak with the Debtor

Before starting the formal process of chasing old debts, you should always have a professional and polite conversation with your debtor.

This is just to remind them that a debt is due. In many cases, this may be enough to prompt a debtor to pay. It is common for people to simply forget that they have bills to pay. A quick chat over the phone or sending an email can resolve this quickly.

If you choose to speak over the phone, you should make an effort to record the conversation. This is just a precaution that will help should you need to refer to this communication at a later date.

Send a Reminder Letter

Have you have tried to speak with a debtor and have been brushed off or ignored? If this is the case, it is best to send a formal reminder letter.

This should be sent via recorded delivery wherever possible, and be professional and polite in tone. Your reminder letter should clearly state that payment is now overdue. It should also list the best ways that payment can be made.

As your letter is being sent through recorded delivery, you will be notified that it has been received. If you do not have a postal address, you can also send an email with a read receipt. If the email is opened and read, having this will achieve the same effect.

You should allow a reasonable length of time for your debtor to respond to or pay the debt. Have you have sent 2 letters that are 14 days apart and have still not had any word or payment? If so, you should send a final notice letter.

This letter should state your intention to escalate the matter to a professional should payment not be forthcoming.

Contact a Professional

Have you attempted the steps above and you are still chasing old debts? If so, you should contact a professional as soon as possible.

There are many options for recovering a debt, with two main methods being the most common.

Hiring a Debt Collection Solicitor

Historically it has been common for both private individuals and businesses to hire a debt collection solicitor. Court action has often been the only way to prompt a difficult debtor into paying.

This option does incur a very high cost, with some solicitors charging thousands of pounds just to look at a case. After this, most solicitors will require hourly fees that cost hundreds of pounds.

For many, this expense is simply too much. Many people in need of help chasing old debts instead are forced to write them off.

Instructing a Professional Debt Collection Agency

Using a professional debt collection agency is an increasingly popular way of chasing old debts. A debt collection agency provides an effective service at a low cost. This makes the option of debt recovery open to everyone.

It is important to use an agency that has a good reputation and ideally is accredited and regulated. All of our partners meet this standard and provide the best service possible.

Complete our easy to use web form now to connect with the leading debt collection agencies in your area. Our service is free and open to anyone.