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Dispelling some of those debt recovery misconceptions

Clarke Willmott associate Karen Chapman and senior associate Stuart Hoysted, examine ten of the most common debt recovery myths.
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There are a lot of misunderstandings as to what can and cannot be done in respect of debt recovery. Here, we dispel the most common myths.

Debt recovery myth #1 – You must accept any offer of repayment made

Most creditors will have heard a debtor say: “I will offer to pay £2 per month. If you take me to Court I will tell the Court my financial circumstances and the Court will only order me to pay £1 per month.”

In response to issued Court proceedings it is possible for a debtor to file paperwork advising of financial circumstances and to make derisory offers of repayment. It is open to the creditor to file a response, and if you have information suggesting the debt can be repaid quicker – for example because the debtor has already told you it can – the Court will make an appropriate final judgment.

Debt recovery myth #2 – You can refuse entry to a bailiff

There is a lot of misleading information concerning what right of entry a bailiff has, though this is understandable as what a bailiff can and cannot do may vary according to the debt they are enforcing. Generally, when enforcing a normal civil warrant, a bailiff cannot force entry into a home. However, if a bailiff can gain peaceful entry, either through an unlocked door or a side garage, then this is allowed.

If a bailiff has previously visited the premises and obtained a signed Controlled Goods Agreement, they can force entry. If there are outbuildings, sheds or garages which are separate from the residential building, entry can also be forced. Not to mention, there are circumstances when the bailiff is able to obtain an order of the Court granting leave to force entry. For example if there is good evidence of a debtor hiding valuable assets in a property.

Debt recovery myth #3 – A person is only liable to pay his “share” 

It is natural that someone who owes £10,000 jointly and severally with their business partner might think they only pay £5,000, as this is their share. But joint and several means all parties are liable for the whole debt until it is paid. What arrangements the debtors have for settling their affairs between themselves is not a concern for the creditor.

Debt recovery myth #4 – A claim form has to be personally served

No they don’t. An individual can be served by post at their usual or last known residence and a company can be served by post at its registered office or principle place of trading. It follows that an application to set aside judgment made solely on the ground that the debtor was not served with the claim form, will normally fail.

Debt recovery myth #5 – The HCEO/bailiff cannot remove a vehicle if it is needed for work

There is some truth to this, but the situations where it applies are limited. The High Court Enforcement Officer or bailiff is not allowed to take control of or remove “tools of trade” – items that are needed by the debtor to do their job or run their business. A vehicle could be a tool of trade, but only if it is exclusively used for business purposes.

It might also be the case that the vehicle is excessive for the business needs. The local painter and decorator will have difficulty in making a business case that he needs a top end Porsche to conduct his trade. In such cases the bailiff can take the vehicle for sale at auction and replace it with a cheaper, more business suitable alternative.

Continue on for points six to ten.

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