A Guide to Small Claims for Debt Recovery

As businesses face the ongoing challenge of late or unpaid invoices, understanding how the small claims process works could help you recover what’s rightfully yours without unnecessary complications or significant costs. At Redwood Collections, we guide our clients through every step of the Small Claims process, ensuring a professional and efficient approach to debt recovery.

What is Small Claims Court? 

Small Claims Court is part of the County Court system and is designed to handle disputes involving smaller sums of money - typically up to £10,000 in England and Wales. For businesses, it offers a cost-effective and straightforward route to pursue unpaid debts when other methods such as reminders and negotiations have not been successful. Whether you're chasing unpaid invoices or other outstanding debts, the Small Claims process can provide a structured path to resolution. 

When Should You Consider a Small Claim? 

Before taking legal action, it's important to exhaust all reasonable efforts to recover the debt. This might include sending payment reminders, negotiating payment terms or issuing a formal letter before action. If the debtor still fails to pay and the amount owed is within the Small Claims threshold, it may be time to consider making a claim.

Small claims can be particularly useful when:

• The debt is relatively low value (under £10,000)
• Communication with the debtor has broken down
• Alternative recovery methods have been unsuccessful

At Redwood Collections, we help you assess whether a Small Claim is the best course of action based on your specific circumstances. 

The Small Claims Process 

The process of making a Small Claim can seem daunting if you’re unfamiliar with the system but with the right guidance it’s a straightforward way to recover unpaid debts.

Before issuing a Small Claim, it's essential to follow the Civil Procedure Rules' pre-action protocol. This step involves making reasonable attempts to settle the debt outside of court, which can strengthen your case if it proceeds to legal action. The pre-action stage typically includes sending a Letter Before Action (LBA) to the debtor. This formal notice outlines the debt owed, requests payment within a specified timeframe and warns that legal proceedings may follow if payment is not made.

Complying with the pre-action protocol demonstrates to the court that you have taken fair steps to resolve the dispute amicably, increasing the likelihood success and cost recovery. At Redwood Collections, we facilitate the drafting and sending LBAs and ensure all necessary pre-action measures are in place before progressing to a formal claim. 

1. Submit a Claim 
   The first step is to file your claim online via the Government’s Money Claim Online service or by completing a paper form. You'll need to provide details of the debt including the amount owed, any interest or charges and any evidence you have of the debt (such as invoices or contracts).
2. Court Action 
   Once you’ve submitted your claim the Court will send the debtor a copy, giving them the opportunity to respond. The debtor may choose to settle the claim, dispute it or ignore it. If they fail to respond, you may be able to request a Judgment in default.
3. Judgment 
   If the case goes to court and the Judgment is in your favour, the debtor will be ordered to pay the amount owed plus any court costs and interest. If the debtor fails to comply with the Judgment, enforcement action may be required. 

Enforcing a Judgment 

Obtaining a Judgment is just one part of the process. Unfortunately, not all debtors comply with court orders. If the debtor still refuses to pay, enforcement options are available. These include:

• Warrant of Execution: This allows bailiffs to collect the debt or seize assets to cover the amount owed.
• Attachment of Earnings Order: This orders the debtor’s employer to deduct the owed amount from their wages.
• Charging Order: This secures the debt against the debtor’s property.

At Redwood Collections, we can handle enforcement on your behalf, ensuring you get the best possible outcome from the small claims process. 

Why Choose Redwood Collections for Small Claims? 

Navigating the Small Claims system can be time-consuming and complex, especially when you are running a business. We offer expert guidance and support through every stage of the Small Claims process, from preparing the paperwork to enforcing Judgments. Our team is experienced in handling Small Claims for a wide range of businesses, ensuring that you can recover your debts efficiently and professionally.

Our service includes:

• Assistance with preparing and submitting your claim.
• Handling communication with the debtor.
• Enforcing judgments to maximise recovery.

We operate with transparency so you’ll always know what to expect in terms of costs, timeframes and likely outcomes.