Other benefits of using the “Insolvency” Route for Debt Recovery

There are many other benefits of using insolvency based recovery procedures. These include:

• The ability to nearly always recover costs in full on a winding up petition if debt paid;
• The ability to recover the legal costs of an action from a debtor on claims which would otherwise be heard in the small claims court where costs are not recoverable even if you are successful. In the current court system, all claims below £5,000 would be heard in the Small Claims Court. However, it is possible to issue a statutory demand or winding up petition on any undisputed debt valued at £750 or upwards.
• Therefore, if you can use the Insolvency Route on claims between the value of £750-£4,999, you have the chance to recover your costs as well, when ordinarily you would not be entitled to costs if they had been commenced in the small claims court;
• Traditional County Court & High Court claims are much slower to progress (6-12 months) and even if you successful, it is rare to be awarded more than 90% of your legal costs back, and the real figure is often nearer 70%;
• Even if you do get Judgment in the County Court or High Court, you still have to enforce that Judgment. Often this is done by using Insolvency Recovery Routes. At FWJ we take the view that where possible, a client should always look to start with the Insolvency route and miss out the time and costs of the traditional court route if possible.
• Speed - recovery times can be as quick as one day from date of issue. In the current economic climate, this can make all the difference between getting your money back and finding that by the time a traditional claim has completed, the Defendant has become insolvent;
• It is the ultimate threat – you may as well get to this stage as quickly as possible, rather than going down the traditional route first. It takes a gutsy debtor to dispute a petition or statutory demand as the consequences of failing are very drastic indeed. It also puts you to the front of the queue if there are other creditors chasing the debtor – there is no stronger threat;
• The costs of a petition are not as high as you might expect.
• This route avoids the need to comply with the new Practice Direction on Pre Action Conduct which came in to force on 6th April 2009.