UNITED KINGDOM JUDICIAL SYSTEM – DEBT COLLECTION
The United Kingdom consists of four constituent countries: England, Scotland, Wales, and Northern Ireland.
The procedure for initiating a debt claim in Scotland and Northern Ireland is the same.
In order for a creditor to collect a debt from a debtor, it is possible to apply alternative dispute resolution methods, file a debt claim in Court, or initiate legal enforcement proceedings.
The cost of mediation is more affordable than filing a lawsuit in Court. The cost is determined based on the amount of the debt.
A legal demand can also be made for the payment of a debt owed by an individual or a company. However, if six years or more have passed since the debt arose, a legal demand cannot be made. In such cases, only legal advice can be sought.
Therefore, attention must be paid to the six-year limitation period in debt collections.
In the United Kingdom, creditors who cannot collect their debts are granted the right to file a debt claim against the debtor, subject to certain conditions.
The legislation in force for debt collection in Scotland, England, Wales, and Northern Ireland may differ in certain respects. Therefore, it is recommended to seek legal advice regarding the laws of the jurisdiction where the claim will be filed.
For example, in Scotland, if the debt amount is less than £5,000, the case is heard under the simple procedure. If the amount exceeds £5,000, the case must be filed in the general court. In both cases, it is advisable to seek legal advice from a lawyer.
Generally speaking, in the United Kingdom, a debt claim can be filed in Court, and if the case is won, the Court’s decision can be used to pursue enforcement or insolvency proceedings.
In England, debt claims must be filed in the county court. The claim can be initiated either online or by postal application. The filing fee and litigation costs can be paid online.
If the Court orders the debtor to pay money and the payment is made into the Court’s account, the funds are held there for 10 years. The creditor must apply to the Court within that 10-year period to recover the money.
Any person claiming to be a creditor may directly file a debt claim in Court.
The court fees payable depend on the amount of the debt. For example, for debts between £10,000 and £200,000, the fee is calculated at 5% of the claim amount.
If the claim is filed online, the debt amount must be specified. If not specified in the application, a court fee of £10,000 is required.
For individuals with financial difficulties, various legal aid schemes exist. Different rules apply in Northern Ireland and Scotland.
A creditor who cannot afford the costs may apply online for legal aid by submitting evidence proving financial hardship and meeting the eligibility requirements.
If the debtor is a company, before filing a claim, it is advisable to check whether the company is insolvent or subject to provisional liquidation.
When filing a claim, accrued interest may also be requested. Future interest may also be claimed, provided it is specified.
If accrued interest is not calculated, the creditor may request the Court to calculate it, which must be stated explicitly in the claim.
The interest rate applicable to commercial debts in default depends on the amount owed and the contractual terms between the parties.