Debt collection – a professional approach


Debt collection is a matter close to many people's hearts at the moment. Whether you are on the creditor or the debtor side of the line it is essential to understand the process to be able to make appropriate decisions.

Essentially debt collection is a specific type of litigation. The claim arises from the failure to pay for services rendered, or for goods sold and delivered. The creditor typically issues an account and if the debtor fails to pay according to the terms agreed between the creditor and debtor, the creditor could issue a final request for payment.

The creditor then hands over the matter to lawyers (jn the legal profession we say "the creditor instructs his attorney") who start by writing a formal letter of demand to the debtor which is sent by registered post. The attorney waits for a response, and in the absence of a response, proceeds to issue summons. It is essential to have the debtor's correct physical address. Without the correct physical address, the Sheriff wouldn't know where to deliver the Summons, the critical first step in the process of litigation.

If the creditor does not know the debtor's current physical address, attorneys will often obtain a report from a recognised tracing agent to confirm the address. It will help to avoid any arguments by the debtor in front of a Magistrate that the Summons was not properly served. It will also save unnecessary charges by the Sheriff arriving at an incorrect address and not being able to serve the Summons and then having to be sent out again.

After service of Summons the debtor can defend or admit the claim. If they admit liability for the debt they can enter into an arrangement to pay the debt off over time. This might be in the form of an Acknowledgement of Debt or an agreement which is made an Order of Court. It is often the case that a creditor will much rather have the debt paid off over time, than have to pay the costs involved in litigation. As long as the debtor is open about the need to pay off the amount, and stick to the payment arrangement, there is really no reason why a debt collection should go to trial. It will of course save even more time and costs if the debtor comes forward about the need to pay off the debt when the letter of demand is received.

If the debtor defends the claim, then the creditor will proceed with litigation to recover the contested amount, possibly going all the way to trial. Reasons for defending a summons might be that the summons is against the wrong debtor, that the service or goods were defective in some way or the amount of the debt is disputed, amongst other reasons. At any stage along the sometimes arduous journey to trial the parties can agree on settlement and bring their dispute and the associated stresses to an end.

Of course the debtor might never respond in any way to the summons. After the proper time period without reply the creditor can apply for Default Judgment which, if granted, will allow the creditor to obtain a Warrant of Execution for the Judgment Debt. The Sheriff delivers the Warrant to the debtor (who is now, after the Judgment has been given, called the Judgment Debtor) and the debtor either pays the debt or if the debtor cannot or will not pay the debt the Sheriff attaches (and possibly removes for sale) items sufficient to cover the Debt and costs.

On becoming aware of a Default Judgment a debtor has 20 days in which to apply for a Rescission of Judgment if the circumstances are appropriate. While not technically part of debt collection processes, a creditor might use the Provisional Sentence Summons procedure which can be significantly faster than a normal Summons procedure described above and places a higher burden on the debtor to defend themselves. That however is a matter for another Grey Space.

Let us know if you need help in the debt collection arena.

From the team.
MA Cooper Attorneys
With Energy and with Experience, giving you Expression