What will I pay for debt recovery?
We look at debt recovery cases as a three stage exercise: initial correspondence seeking recovery of the debt; court proceedings; and enforcement of any judgment obtained. We set out below details of each stage and the costs which will be incurred.
All services provided by Napthens LLP are subject to VAT at the current rate of 20%
Stage One: Pre-Court proceedings
No Recovery No Fee Service (Debts over £500.00)
The No Recovery No Fee debt collection service can be used where a business has unpaid invoice debts for goods or services supplied to an individual or another business totalling between £500 and £10,000 (including VAT and interest). As part of this service our team will:
- Write to the debtor with a formal letter demanding payment within a set period;
- Provide a follow up call to the debtor after the 7 day period;
- Send a final warning of legal action letter;
- Advise you on the costs of making a court claim against the Debtor.
- Negotiate terms of repayment or settlement with the debtor on your behalf*;
|Debt Amount||% Commission|
|Up to £5,000||5%|
If we successfully recover money from a debtor through this service you will be charged commission calculated as a percentage of the debt as set out in the table opposite. Please note our fees are charged based upon the full value of the Debt even if full payment is not received (for example, if the full Debt is £7,500 plus VAT but we only recover £4,000 the commission payable is calculated at 3% i.e. £120 plus VAT).
If the Debtor disputes the Debt the matter will be dealt with under our Disputed Debts procedure (see below).
* In the event of us being instructed to accept instalments on your behalf a monitoring charge of £5 plus VAT per action will apply
Debts over £10,000.00
Debts over £10,000.00 are automatically referred to our Commercial Litigation Team who will provide a quote for acting for you. The quote will be based on the complexity of issues involved and estimated time required to deal with the matter. Hourly rates for debts over £10,000.00 vary between £160.00 – £250.00 (+VAT) per hour.
If a Debtor disputes the debt the matter will be dealth with under our Disputed Debts procedure (see below).
Disputed Debts up to £10,000
Where a business has unpaid invoice debts for goods or services supplied totalling between £500 and £10,000 (including VAT and interest) which are disputed we offer a “small claims” handling service. A debt recovery caseworker (usually either a Trainee solicitor or fully qualified solicitor) will assist you in corresponding with the debtor and assessing the merits of your claim as against the dispute raised with a view to reaching settlement of the dispute prior to Court proceedings. Fees are charged for time spent working on the matter at an hourly rate of £115.00 or £160.00 (plus VAT) depending upon the complexity of the matter.
The average timescale for this process, pre-proceedings, is usually no more than 6 weeks. If the matter is not resolved by agreement within this time our case worker will discuss with you the further steps you are able to take, which will usually involve issuing Court proceedings (although if the caseworker considers that the Debtor’s dispute is without merit they may advise that a Statutory Demand should be served upon the Debtor in the alternative-see below under Insolvency Services).
As you are usually unable to recover your legal costs from a Debtor where the total Debt (including VAT) is less than £10,000, our fees for this stage are usually limited to 3-5 hours work i.e. between £345 (plus VAT) and £800 (plus VAT). However, upon receiving initial instructions from you our caseworker will provide you with an estimate of the likely total fees for dealing with the matter up to and including a trial in the County Court.
Debts over £10,000.00 (both undisputed and disputed) are automatically referred to a fully qualified solicitor in our Commercial Litigation Team who, upon receipt of initial instructions, will provide a fee estimate for acting for you at the pre and post Court proceedings stage (again, up to a trial). The fee estimate will be based on the time required dealing with the matter and will vary depending on (not an exhaustive list):
1. The complexity of the legal issues.
2. Whether it is necessary to instruct a barrister to advise on any technical legal points.
3. The volume of documents we need to consider which are relevant to the issues in the case.
4. Whether the Debtor has raised a Counterclaim against you.
5. The number of lay witnesses required to give evidence.
6. Whether evidence is required from one or more experts.
The hourly rates for our solicitors dealing with debts over £10,000.00 currently vary between £160.00 (plus VAT) and £250.00 (plus VAT).
Note that the Courts do require parties who are in dispute to work together to resolve the matter prior to Court proceedings being issued. In our experience, it is usually necessary to spend anywhere between 5 and 10 hours seeking to resolve a Debt dispute before Court proceedings or an Insolvency Procedure is commenced. The estimated costs pre-proceedings will therefore typically range between £800 (plus VAT) and £2,500 (plus VAT). The average timescale for this process is usually between 4 and 12 weeks.
Stage Two – Court Proceedings
Issuing Court proceedings – Undisputed debts between £500 and £10,000 (Small Claims Track)
Please note, the No Recovery, No Fee route does not apply to Stage Two.
Please refer to the link below for full details of the Court Fees payable for the different stages of Court proceedings.
Your caseworker will prepare the Court papers for your claim and file these with the Court on your behalf. Our fees are calculated by reference to the total Debt Amount (including VAT and interest). A schedule of our fees for drafting your claim and sending this to the Court is provided below.
|Debt Amount*||Our Fee to Draft Claim||Court Fee to Issue Claim||Recoverable Costs|
|Up to £300||£75 (plus VAT)||£35 (plus VAT)||£85 (plus VAT)|
|£300- £500||£80 (plus VAT)||£50 (plus VAT)||£100 (plus VAT)|
|£501-£1,000||£130 (plus VAT)||£70 (plus VAT)||£140 (plus VAT)|
|£1,001 – £1,500||£140 (plus VAT)||£80 (plus VAT)||£160 (plus VAT)|
|£1,501- £3,000||£150 (plus VAT)||£115 (plus VAT)||£195 (plus VAT)|
|£3,000 – £5,000||£160 (plus VAT)||£205 (plus VAT)||£285 (plus VAT)|
|£5,001 – £10,000||£180 (plus VAT)||£455 (plus VAT)||£555 (plus VAT)|
|£10,000- £100,00||By quote||5% of claim (plus VAT)||Assessed by the Court|
“Recoverable Costs” are the limited fees (including the Court Fee) which a Court allows you to recover from your opponent in addition to the Debt amount in the event that you succeed with your claim
If the Defendant does not file a written Defence to your claim within 14 days of receipt (or 28 with an agreed extension of time) you can request the Court to enter judgment against the Defendant (known as “default judgment”). Our fees for requesting default Judgment are set out in the table below.
|Debt Amount||Our Fee (plus VAT)||Recoverable Costs (including VAT)|
|£500 – £5,000||£62||£22 – £55|
|£5000 – £10,000||£90||£30 – £70|
If your claim is disputed, the caseworker dealing with your matter will provide you with a cost estimate for dealing with each stage of the proceedings up to and including trial. The estimated costs for dealing with the matter up to a trial in a Small Claims Track claim vary between around 10 hours and 30 hours (£1,150 plus VAT and £4,800 plus VAT) depending upon the complexity of the case and the relevance of the 6 factors listed above.
Please also refer to the Court leaflet EX306 which contains further information about the Small Claims Track.
Please note that we will ordinarily instruct a junior barrister to represent you at the final hearing/trial and their typical fee (which is in addition to our fees) is around £500 (plus VAT).
If it is necessary to instruct experts their fees will be in addition.
Smalls Claims Track cases usually take around 6 months from the commencement of proceedings to reach trial.
Issuing Court Proceedings (Debts between £10,000 and £100,000)
The matter will be dealt with by a qualified solicitor in our Commercial Litigation Department whose hourly rate will vary between £160 (plus VAT) and £250 (plus VAT). They will provide you with a costs estimate for dealing with each stage of the proceedings up to and including a trial.
The total estimated fees will vary and will depend mainly upon the 6 factors listed above.
Your solicitor will prepare the court papers and file these with the Court on your behalf. In some cases they may instruct a barrister to prepare these on your behalf and their fee for this is typically between £500 – £1,000 (plus VAT).
Your solicitor will decide which is the most appropriate Court to issue the proceedings in although for Debt matters this will usually be in the local County Court.
The Court will allocate the claim to either the “Fast Track” or the Multi Track”. Please refer to the Court leaflet EX305 which contains further information about these.
The estimated costs for dealing with a disputed Debt matter up to a trial in a Fast Track or Multi-Track Small Claims Track claim vary between around 40 hours and 100 hours (£6,400 plus VAT and £25,000 plus VAT) depending upon the complexity of the case and the relevance of the 6 factors listed above.
We will instruct a barrister to represent you at the trial and their fees will be in addition to our fees. Their fee for the trial will vary depending upon their seniority and the length of the trial and can be up to £10,000 (plus VAT). If it is necessary to instruct experts their fees will be in addition.
Fast Track and Multi-Track claims usually take at least 12 months from commencement of proceedings to reach trial.
Stage Three: Enforcement
What is Enforcement?
Enforcement relates to the methods of obtaining payment from the debtor following a Court Judgment in your favour which the Defendant fails to pay.
The enforcement options available, and the most appropriate type to use, depend upon a number of factors including the debtor’s economic circumstances.
We will discuss and agree with you the most suitable option for enforcement.
|Action||Our Fee (plus VAT)||Court Fee (VAT not applicable)||Other Fee||Recoverable Costs if successful at Court (including VAT)|
|Instructing High Court Enforcement Officer||£100||£66||£90||£117.75|
|Attachment of Earnings Order*||£200||£110||£110|
|Applying for Charging Order*||£300||£110||£43||£263|
|Third Party Debt Order*||£300||£110||£108||£208.50|
*Where an application is defended by a Debtor the matter will be charged at an hourly rate.
We will provide you with an estimate of the likely charges on a case by case basis.
Tracing Services – £55.00 (plus VAT) per trace
Where a Debtor’s current whereabouts are unknown we will instruct a tracing agent to locate their current address (usually on a “no find no fee” basis).
|Action||Our Fee (plus VAT)||Court Fee (VAT not applicable)||Other Fees (plus VAT)|
|Statutory Demand||£150||£150 process server|
|Preparing Bankruptcy Petition (Individuals)*||£650||£1270||£150 process server + search fee + land registry fee + gazette fee + agent fees|
|Preparing Insolvency Petition (Companies)*||£750||£1880||£150 process server + search fee + land registry fee + gazette fee + agent fees|
*Where an application is defended by a Debtor, the matter will be charged at an hourly rate (plus VAT).
For all Petitions an advocate will need to be instructed to present the Petition to the courts. We will provide you with an estimate of the likely charges on a case by case basis.
Please refer to the government guidance on Statutory Demands for further information.
Who will be dealing with my case?
Your case will be handled by a trusted member of our experienced team. Full details of the experience and qualifications of our team are available on our website including the types of work normally undertaken. Regardless of who is working on your case the matter will be supervised by David Bailey, Partner and Head of Litigation.