Actions Creditors Can Take During the COVID-19 Crisis

News

DATED: 7 MAY 2020

As the Covid-19 crisis continues, with no indication of when or how it will end, we look at questions commonly being considered by creditors:

Can I still demand payment of my debt?

Yes you can. There is no reason you cannot request payment of sums that are due. However, be mindful of the way in which you do so. Every business is affected by the crisis and you may jeopardise your ongoing relationship if too aggressive.

Can I agree a payment plan?

Yes you can. Work out what is good for you and achievable by your debtor. Don’t set unrealistic goals.

Can I do anything to help collect my debt?

Try to get an acknowledgement of the debt in writing. This reduces the chances of any subsequent dispute. It might also prompt a repayment proposal.

What can I do if I know the debtor is struggling financially?

Work with the debtor to try and reach an amicable agreement. In the case of corporate debtors, consider whether you might be able to persuade the directors to give you a personal guarantee.

Can I still issue Court proceedings?

The Courts are still operating but with less staff which therefore causes significant administrative delays. Urgent cases will take priority and many hearings are being adjourned. So be prepared for matters to take longer to be resolved through the Courts.

Can I serve a statutory demand?

Yes but be wary of using this as a tactic for recovering debts. The Courts are unlikely to look favourably on a creditor who has taken this approach unless justified. And if winding up proceedings are anticipated, they too will be affected by the delays at the Courts.

Can I enforce my judgment?

Yes but the powers of the sheriffs/bailiffs are currently affected by lockdown in that they cannot personally visit debtors. They can however continue to deal with them by email/telephone. Other enforcement procedures through the Courts (charging orders/oral exams/attachment of earnings) will continue, but slowly.

Keep on top of credit control

On a practical note, some of you may have furloughed accounts staff making it difficult to keep on top of credit control. Try to stay aware of the status of your accounts. Continue to invoice where you can and try to maintain cash flow by sending statements of account.

A Letter of Claim

Once your accounts are overdue consider whether a Letter of Claim might be suitable in order to prompt payment. This situation will not last forever but many businesses are claiming that they are unable to pay during lockdown. In some cases this may be true but it may also be a delaying tactic.

We can help with requesting payment from your creditors without being heavy handed. For taking your instructions and sending a Letter of Claim (and Reply Form where appropriate) we charge from £9.50 plus VAT. Please see further details here.

If you are concerned about your cash flow or debts and would like an informal discussion about your options or advice on how to set up a payment plan or negotiate payment terms, please contact our Debt Recovery team.

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.