Top five debt recovery myths – the misunderstandings and misconceptions

Karen Chapman

There are a lot of misunderstandings as to what can and cannot be done in respect of outstanding debts. Karen Chapman, associate and Stuart Hoysted, senior associate at Clarke Willmott LLP, both specialists in debt recovery, examine the ‘top five’ debt myths and dispels some of those misconceptions.

A creditor must accept any offer of repayment made.

Most creditors will have heard a debtor say “I will offer to pay £2 per month. If you take me to Court I will tell the Court my financial circumstances and the Court will only order me to pay £1 per month.”

In response to issued Court proceedings it is possible for a debtor to file paperwork advising of their financial circumstances and to make derisory offers of repayment. It is open to the creditor to file a response, and if you have information suggesting that the debt can be repaid quicker, then the Court will make an appropriate final judgment.

You can refuse entry to a bailiff.

There is misleading information concerning what right of entry a bailiff has. Generally, when enforcing a normal civil warrant, a bailiff cannot force entry into a home. However, if a bailiff can gain peaceful entry, either through an unlocked door or a side garage, then this is allowed.

If a bailiff has previously visited the premises and obtained a signed Controlled Goods Agreement, they can then force entry. If there are outbuildings, sheds or garages which are separate from the residential building, entry can also be forced.

Finally, there are circumstances when the bailiff may be able to obtain an order of the Court granting leave to force entry.

A person is only liable to pay his ‘share’ of a jointly and severally liable debt.

It is perhaps natural that someone who owes £10,000 jointly and severally with their business partner might think that they should only pay £5,000, as this is their share. However joint and several means that all parties are liable for the whole debt until it is paid. What arrangements the debtors have for settling their affairs between themselves is not a concern for the creditor.

A claim form has to be personally served.

No, they don’t. An individual can be served by post at their usual or last known residence and a company can be served by post at its registered office or principle place of trading. It follows that an application to set aside judgment made solely because the debtor was not served with the claim form, will normally fail.

All contracts or agreements must be in writing.

Whilst it can make life easier if there is a written document stating what the parties have agreed, there are only limited circumstances where there is a formal legal requirement for there to be a written contract. If you were so inclined, you could verbally agree with a builder that he will build you a bespoke mansion, in the same way you instruct the window cleaner to wash your windows!