When should I use a solicitor to help with debt recovery?
We’ve talked a lot about why you shouldn’t use a solicitor to recover debts, but there are many good reasons as to why you should.
The reason we advise clients to seek legal advice on claims lower than £10,000 is because recovering the debt may not be the only legal issue they are facing.
For example, if you’re a landlord and your tenant is £700 in arrears because they can not or will not pay their rent, asking them to pay it is no good. But that leaves you with an occupied property, potentially with a mortgage, that is only draining your finances. You’ll likely want to evict them to get new tenants in and the cash flowing again. But this needs to be in line with their tenancy agreement and established procedures. Without legal help from an experienced landlord and tenant solicitor, you risk failing to take back possession of your property, and the losses mounting.
In this situation, it simply wouldn’t make sense to pursue a debt recovery matter on its own as it’s only applying a plaster to the issue.
When it comes to larger claims in excess of £10,001, the likelihood of the other side having legal representation increases in line with the complexity of these cases.
If you are representing yourself against an experienced litigation solicitor, your chance of success diminishes significantly unless you’re a genius in disguise.
Using the same maths as the case recovering £1,000 above, let’s look at a case where a business is owed £100,000. Through a combination of professional fees and court fees, these cases can easily cost in excess of £10,000+ to fight. But even if this is the case, you’ll recover £90,000 that you would have otherwise written off or incurred.
The percentage gain is the same, but the absolute amount of money re-gained is clearly much, much higher. £90,000 buys a lot more than £900.
But the risk of losing the case is also higher, especially if the other side is awarded their costs. This is why having the right solicitor on your side is vital.
For commercial debt recovery issues, questions can also arise of whether the growing debt constitutes non-performance within the contract, and whether or not this nullifies the contract in its entirety. This wouldn’t necessarily come up if you are only looking at recovering the monies owed.
Debt recovery solicitors will also advise you on your alternatives to seeing the case through to a final hearing, which many claimants want to avoid due to the timings and costs involved. It can take as long as 2 years to get a hearing date listed in the Crown Courts. This can include negotiating an out of court settlement.
This isn’t suitable for everyone, but will depend on your circumstances. For example, if you’re owed £50,000 and want £25,000 to start a business, you might be more flexible about settling sooner and cutting your losses than waiting until your case is listed. After all, the £25,000 investment into the new business could return far more than the original £50,000 owed.
Finally, if the debt you are claiming for is significant, a debt recovery solicitor would be able to help you calculate the interest owed, which you can also claim for. Depending on how long the debt has been outstanding, this can be a significant amount.
In short, there are a huge number of circumstances where seeking debt recovery legal advice can be advantageous.