BlogX McKenzie

Debt Collection versus Brexit

Some may think this is controversial but debt collection could quite easily be compared to someone voting for Brexit.

Emotions run high and all Brexiters want is out of the EU. A percentage of Brexiters will not fully understand the consequences of what is likely to happen as a result, to be fair I think you would need a political degree to understand but that is a side issue. The gut feel to leave is there and ultimately it may turn out okay on the day or it may be an epic fail. Until it happens we will not know for sure.

Risk takers will just go ahead with it and risk averse will want to know all the facts before proceeding. Both strategies may work out okay in the end either by luck or studying the data. Procrastinating may never achieve anything.

Similarly debt collection follows a similar process. You may get to a stage whereby you must decide whether to take legal action or not. Emotions run high and you just want to make a stance as a point of principal but ultimately you may be throwing good money after bad if you don’t do your due diligence first.

Sometimes the threat of legal action is enough to get your debtor to pay. Likewise if you issue proceedings and obtain judgment, your debtor may just pay but what happens if they don’t? You will need to take enforcement action or just put it down as a loss. It goes without saying that you will have a greater chance of success if you know from the outset what enforcement action you can take. For instance, are they a homeowner? Then Insolvency proceedings or a Charging Order may be the right answer. Or is there an asset such as a vehicle? Then considering instructing a High Court Enforcement Officer will possibly be the best way forward. Or are they employed? Then you can apply to get an Attachment of Earnings, an order from the court that forces the employer to deduct payment from the debtor's wages and pay it directly into court.

But.....What if your debtor is not a homeowner, has no assets and is self-employed? Options here are very limited. Of course you can do all of the above but the likelihood of success significantly decreases without knowing any of this information, thus throwing good money after bad.

I’m not saying not to do it but at least know what to expect if your debtor doesn’t pay. That’s why I like to look at a case from the end result and work my way backwards without any emotion and provide recommendations based on facts. The purpose of this is to ensure that our client's do not pay for something that may not yield a result or at least cover their costs.

I wish I could predict the same with Brexit but I’ll leave that to our lovely politicians and parliament.