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Charging Order on PropertyAn application for a charging order has two stages one being interim order and a final order.

An interim charging order is usually granted by the court to stop you from selling your property before the final order can be made without your creditor knowing.

If a court grants your creditor a final charging order, this means that if you sell your property, you must pay your creditor back out of the proceeds.

How do I obtain a Charging Order against my debtor?

You will need to apply for a Charging Order on a standard court form. The court will usually consider your application without a hearing, and if they consider everything to be in order an Interim Charging Order will then be granted by the court. The Interim Charging Order can then be registered against the Debtors interest in the property by way of an Agreed Notice (If the property is solely owned by the debtor) or by way of a Restriction (If the property is jointly owned).

The court will then list the Charging Order application for final hearing. At this point the court will either dismiss the Interim Charging Order, if your debt has been repaid, or make it Final either with or without modifications. Once the court has awarded you the Final Charging Order you can then proceed to have this registered on the Title Deeds of the property, thus then making your unsecured debt, into a secured debt.

Please be aware that The Charging Order will be registered only on the debtors beneficial interest in the property. So if the property is jointly owned it will not be registered in anyway against the other owners interest.

What are the advantages of using a Charging Order?

Your unsecured debt now becomes a secured debt against the debtors property
You can use the Charging Order with other methods of enforcement like, bank arrestments, arrestment of earnings and attachment of goods using Bailiffs or High Court Enforcement Officers
It’s a cheap, quick and effective way of enforcing your County Court Judgement
You stand a good chance of getting paid if the debtor has a lot of equity in the property its very unlikely they would let a sale of the property go ahead as they may stand to lose too much.

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What can a debt collection agency do for your business?

debt collection agencyA debt collection agency can’t make a debtor or business pay if they are in liquidation or in the case of an individual if they are bankrupt. What they can do is make sure that your debtor makes regular payments on time and sticks to a payment plan and not simply try’s delay tactics. There are cases where a business continues to operate and still trades to generate revenue despite notifications of ceased trading and it is part of the debt collection agency to find this out for you. In this situation, your recovery agency can attempt to establish if there is any money or assets to offset against the total debt owed to you.

Debt collection agents can try to negotiate a settlement if your debt is disputed but you must provide proof of debt also show proof that work has been completed or goods supplied, all previous correspondence and conversations between the parties at the outset. If the invoice remains in unresolved dispute then your debt collection agency cannot force them to pay. There is however the option of mediation or legal action, which must always be weighed up and considered carefully to avoid the risk of throwing good money after bad. Your debt collection agency should be able to advise you on the best path to take.

A debt collector can’t pursue debts more than six years old if no contact has been made in that time and if the debtor has not admitted to owing the money. However, under the Limitation Act 1980, if there has been continued contact regarding the invoice and the debtor has either made a part payment or communicated with your business, the collection agency can pursue indefinitely.

Debt collection agencies can take action to trace people who have gone missing. They will need as much information from you to conduct the search such as previous contact details, correspondence, bounced cheques, etc. and then they will look for those debtors through every means possible.

A debbt collection agency can save you time and money. Chasing debts can be very time consuming task for any business. It takes persistence and patience to establish links and contact to move that debtor down the path to payment. When outsourcing debt collection work, your business can be focusing on more productive activities that would have otherwise been spent on the phone (often to the wrong person), writing letters and sending emails.

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According to research conducted by BACS in 2015, over three quarters of UK businesses suffer from late and non-payment of invoices. The payment giant, who processes millions of electronic business payments every day, found that an astonishing 76% of businesses are being affected by late payments of up to 6 months beyond agreed contract terms.

BACS also revealed that in companies that are suffering from late and non-payment:

20% of directors have been forced in to taking a pay cut

26% have had to increase bank overdraft use

23% have no choice but to pay their own suppliers late

The effects of late payment can be extremely detrimental to the economic health of a business and its owners.

The Late Payment of Commercial Debts (Interest) Act 1998 was introduced to compensate creditors for the late payment of debt and to deter late payment. It only applies to the commercial supply of goods and services where you don’t have a provision for interest in your Terms of Business.

In brief, it enables you to claim interest and compensation for invoices that are not paid on time.

You can claim Late Payment Interest and Compensation if:

You have supplied goods and services

Your buyer bought for business purposes

The contract is not governed by a consumer credit agreement

You don’t have to tell your customers that you will claim Late Payment interest or compensation if they fail to pay on time before they have actually breached your payment terms. However, it may be beneficial for your cash flow to tell them in advance of your intentions, should payment be made late. You could put warnings to this effect on your invoices; your statements and in your terms of business.

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“I have dispute this, I’m not paying” If there is a genuine dispute then it’s imperative you find out what the dispute is and whether it’s genuine or not.

“I have not received your invoice” Scan it in to your computer and email it to your customer whilst asking for an electronic payment.

“I can’t afford to pay you until my customer has paid me” – This is a tad tricky; can your customer make an acceptable immediate part payment? You need to pin your client down; insist on an immediate part payment and then suggest a review in 2 weeks’ time.

“I sent the invoice back to you it didn’t bear the right order number on” Ensure that you get your documentation right first time so as to remove this as an excuse. If you receive orders PLEASE read the small print. Make sure your invoice bears the correct info and is addressed to the right person/company – if in doubt telephone the customer upon receipt of their order to double check if the correct person and address.

“The cheque is in the post” Oh that old chestnut it keeps cropping up doesn’t it! Explain it has not been received and should it ever arrive you will destroy, then provide your bank account details and ask for an electronic bank transfer.

“No one here to sign a cheque” ask for a BACS payment or credit card payment

“The Owner has died” Ok occasionally this may have tragically happened and although sad you still need your money! If the firm was a sole owner then the business has ceased, however, it may continue to be run by a relative in effect taking over the business. In law you may have a claim against the Estate however, you may wish to consider your position and take legal advice depending upon the size of the debt.