Should I get legal help to chase payments?

One of my clients owes me £60,000 and we are on the brink of refusing to trade with them. I’m considering getting legal help to chase this debt, but I’m worried it will cost me a lot of money. I don’t want to drag them through the courts at their expense or mine, so what is the smartest and least costly way to approach this?

A. James Knight writes:

First, prepare a repayment schedule to include some sort of lump sum (say £10,000) to be paid immediately. Then notify the client in writing (email is fine) that the debt has reached an unsustainable level and that you will no longer be able to provide goods/services unless they agree to the schedule. Perhaps hint at “further action”, but don’t go in too heavy yet.

If the client has the money, it will probably comply. If not, and assuming there’s no dispute over the debt, you have two options:

1. Issue legal proceedings. You can use a solicitor to do this, but Money Claim On-line ( makes the process fairly simple for non-lawyers, so that the cost can be limited to just the court fee. This is an excellent and cheap way to keep the pressure on, because the defendants are required to state whether they have any reasons for non-payment within 14 days of the claim or they will face a court judgment.

2. Get your solicitors to issue a statutory demand requiring full payment within 21 days. If payment is still not forthcoming, your solicitors will be in a position to issue a winding up petition – an application to the court to wind up the client company and distribute available assets to all creditors. But, if it reaches this stage and there is still no payment, the company is probably insolvent.

If you have provided goods rather than services, and your own terms of business have been drafted with a ‘retention of title’ clause, ownership of the goods only passes to the client on payment. This means that if the goods are still at the client’s premises, you can recover them even if the client goes bust. If your terms don’t include this clause, it’s time to have them reviewed.


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