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When does your business need a debt collection lawyer?
In a 2021 study conducted by Barclays, 58% of small and medium-sized businesses (SMEs) have outstanding invoices. The consequences of having to wait for payment leads to an estimated 50,000 businesses closing, according to the Federation of Small Businesses (FSB). Regardless of the size of a business all companies rely on a steady cash flow to maintain general upkeep, the ability to develop or expand and pay their own debts. In situations where late payments have occurred or continue to occur, a debt collection lawyer may be required to assist in recovering any outstanding debts.
This guide will outline when your business may require a debt collection lawyer and the key factors to consider when recovering debts.
Click on the links below to jump to that section:
Discover how debt collection lawyers can be beneficial and help when recovering commercial debts.
The different situations in which a debt collection solicitor may be required.
Find out what you should be aware of when instructing a debt collection lawyer, and features to look out for.
Compare the advantages and disadvantages of both a debt collection agency and a lawyer to see which is most beneficial for your business.
Read the most common queries on commercial debt collection.
What is the role of a commercial debt collection lawyer in debt recovery?
Navigating the commercial debt recovery process is challenging as it requires a particular expertise, comprehensive knowledge of England and Wales law, and legal acumen. If your business is owed debts and internal attempts to resolve these disputes have failed, seeking legal advice and assistance from an expert is essential.
A commercial debt collection lawyer serves as a strategic partner in the debt collection process, offering multifaceted legal advice, including:
Pre-legal advice
Before your attempt to collect your outstanding debt escalates into legal proceedings, a debt collection lawyer provides invaluable guidance on the most effective strategies for debt recovery. This may involve assessing the debtor's financial situation, evaluating the strength of your case and exploring alternative dispute resolution (ADR) methods.
Issuing a letter of claim
There are various debt collection letter types that set out to inform the debtor of the outstanding debt. Informal letters should be sent internally by the creditor. However, as the process escalates, debt collection lawyers must be instructed to send a Letter Before Action (LBA) that states the amount outstanding, a date by which it must be paid before legal action will be undertaken.
Your debt collection lawyer will craft a persuasive and legally sound letter of claim, to attempt to compel the debtor to settle the debt promptly.
Initiating legal proceedings
Should all informal negotiations and letters of demand prove ineffective, a debt collection lawyer will, on your instruction, initiate legal proceedings on behalf of your business. This may culminate in obtaining a County Court judgment, compelling the debtor to repay the outstanding debt under legal obligation.
Alternative Dispute Resolution (ADR)
Recognising the cost-effectiveness and efficiency of resolving disputes outside traditional court proceedings, debt recovery lawyers adeptly utilise ADR methods such as mediation and arbitration. This enables swifter resolution often while preserving business relationships and minimising legal expenses.
For more information, visit our arbitration and dispute resolution services here.
When may your business require a debt collection lawyer?
After failing to recover the outstanding debt, businesses should seek legal advice to determine their best approach. Although you may think your company does not require external assistance, the hiring of expert debt collection lawyers will help speed up the collection process and enhance the success rate of recovering outstanding debt and ensure that you do not inadvertently compromise the law as the debtor has legal rights. In certain situations, instructing debt collection lawyers is not only beneficial but a necessity.
For example, where resources are limited (as in small to medium-sized businesses or new starters), enlisting the expertise of a debt collection lawyer ensures a targeted and strategic approach to debt recovery. Outsourcing this task proves to be both a cost-effective and efficient approach, freeing up valuable resources for other priorities.
In addition, disputes over invoices can disrupt and strain business relationships. A debt collection lawyer adeptly navigates these disputes, leveraging legal expertise to facilitate resolution and ensure timely payment, thereby safeguarding your business interests.
What qualities should you look for in a good debt collection lawyer?
Selecting the right debt collection lawyer is paramount to the success of your debt recovery efforts. Consider the following key qualities to distinguish exemplary debt collection lawyers:
Successful track record in recovering debts: A proven history demonstrates the lawyer's efficacy and expertise in navigating complex debt collection laws and issues.
Effective communication skills: Clear and concise communication is essential in debt recovery. Debt collection lawyers must communicate with debtors assertively yet professionally, fostering productive dialogue and negotiation. In addition, maintaining strong communication with yourself, so that you are aware of what is happening at all times.
Good relationship with tracing agents and mediators: Collaboration with tracing agents and mediators is essential. In cases where the debtor’s whereabouts are unknown, a tracing agent will act on the lawyer's behalf to gather the debtor’s information and find their current location. As well as mediators, who will embark on negotiations between the debtor and creditor, tracing agents help expedite the debt recovery process.
Specialised services: Look for lawyers specialising in commercial debt collection, and who possess in-depth knowledge of relevant laws, regulations and knowledge of the industry sector in which the debt is owed.
Reviews and testimonials: Seek feedback from past clients to gauge the lawyer's reputation, reliability, and client satisfaction levels. Recognition and accolades within the legal profession also affirm the lawyer's expertise and dedication to excellence in debt recovery.
Giambrone & Partners provides bespoke debt collection services, looking at your specific requirements to suggest the best approach for successfully recovering outstanding commercial debts. Our debt collection lawyers will form and send a Letter Before Action (LBA), before issuing proceedings.
Should I use a debt collector agency or a solicitor?
Compare the differences between debt collector agencies and expert lawyers below:
| Debt collectors (a debt collection agency) | Debt collection lawyers |
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Giambrone & Partners’ debt collection services
Giambrone & Partners is an international law firm specialising in various fields, including litigation, cross-border disputes, and debt collection. With a successful track record in recovering debts, our debt collection lawyers will work closely with you and your business during each stage of the process, and provide expert legal advice.
For more information, browse through our debt collection services or request a callback to speak to one of our lawyers today.
Frequently asked questions
How is international commercial debt dealt with by debt collection lawyers?
Commercial debt collection lawyers handle international debt recovery by leveraging their expertise and knowledge of international laws and regulations, and utilising international legal frameworks in other jurisdictions.
Navigating the complexities of cross-border debt collection, expert lawyers will prioritise effective communication and adherence to legal protocols to secure successful outcomes for their clients.
For more information, read our guide on collecting debts from overseas with our expert guide here.
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