With outstanding debts, the decision to issue proceedings shouldn’t be taken lightly. In fact the Pre-Action Protocol for Debt Claims (which applies to debts owed by individuals and sole traders to sole traders or businesses) places an obligation on creditors to ask debtors to provide details of their personal circumstances before doing so.
The question is, if the debtor does not engage in this Pre-Action correspondence, how should the creditor proceed?
It’s worth remembering that if a claim is to be issued creditors must do so within six years of their entitlement to bring the claim arising. Therefore, there is time for creditors to assess their options before doing so.
Insolvency proceedings might be an option depending on certain conditions being met but this course of action is not without cost and is procedurally rather onerous, so it is recommended that any creditor seek legal advice before going down this route.
Insolvency proceedings aside, the creditor may consider issuing a claim against the debtor to be the most sensible way of proceeding, rather than proceeding with negotiations.
It is always worth bearing in mind that if successful, a judgment will be awarded but that judgment will simply determine that the debtor owes the money, it’s not a guarantee that payment will be made.
Creditors can enforce judgments against their debtors in various ways – for example, by applying for a Charging Order against property the debtor owns or for a deduction from their wages.
If these assets are not available to enforce against then it will be more difficult to recover the judgment sum. Therefore, it is advisable to assess what circumstances might be preventing payment being made and if those circumstances might make it difficult to enforce any judgment obtained before issuing proceedings, even if no response has been received.