How to Recover a Debt from an Individual

It can be hard to know when to take action against a debtor who will not repay their debts. People fall on hard times, but the fact remains – creditors are entitled to take appropriate action to recover what is owed and mitigate their losses.

Creditors have a range of options available, although fortunately, it is rarely necessary to engage in protracted litigation. In many cases, a single letter before action from a solicitor is enough to prompt repayment or at least convince an evasive debtor to engage in settlement negotiations.

Debt recovery processes can sometimes present businesses with issues where individuals are concerned. Individuals (including sole traders in some cases), are allotted more legal and regulatory safeguards than companies, such as consumer credit protections.

At the very least, commencing legal proceedings against an individual will likely invoke the Pre-Action Protocol for Debt Claims, a specific set of rules that govern businesses approach to debt recovery claims.

So, when taking debt recovery action, it is also essential to consult legal specialists with practical experience in this area.

Here, we outline some of the main options a business or individual has to recover a debt from individuals, including sole traders. We cover:

  • Pre-action negotiations
  • County court money claims
  • Enforcement options
  • Bankruptcy

For a more comprehensive breakdown of the general commercial litigation process, we have produced An Introduction to Litigation which explains each step in the process in detail.

Alternatively, find more information about our bespoke high-value debt recovery services here.

Pre-action negotiations

There is rarely a case where legal action will be the first step. Costs aside, the courts expect creditors to take all possible steps to resolve the matter out-of-court before starting a legal claim.

The Pre-Action Conduct and Protocols Practice Direction clearly sets out the general approach required by the parties before commencing proceedings, including:

  • Taking the time to understand each other’s position
  • Agreeing a way forward
  • Considering forms of Alternative Dispute Resolution, such as mediation
  • Taking steps to reduce the costs of resolving the dispute

For business-to-individual debts (including cases where the creditor or debtor is a sole trader), the objectives of the Practice Direction are bolstered by the Pre-Action Protocol for Debt Claims which sets out the expected pre-action conduct, including:

  • Rules regarding the letter of claim/letter before action that the creditor should send to the debtor before starting proceedings.
  • Details of the initial information the creditor should supply to the debtor and evidence, such as details of how the debt has arisen.
  • Rules about service.
  • Deadlines for the debtor’s response.
  • Rules regarding disclosure of documents and relevant information.
  • Taking steps to settle, including rules regarding Alternative Dispute Resolution.
  • Final steps to take before commencing proceedings, such as checking compliance with the Pre-Action Protocol.

‘Without prejudice’ negotiations

An important part of pre-action is ‘without prejudice’ correspondence that allows both parties to negotiate openly without negatively impacting any rights or claims should the matter go before the court later on, other than in respect to costs.

Watch out for limitation

At all times, the creditor should be aware of limitation, which is the typical timeframe they have to commence legal proceedings. In respect of unsecured debts, the creditor typically has six years from the date of breach of the last time the debtor acknowledged the debt.

If a debt falls outside of the relevant limitation period, the creditor is ‘statute-barred’ and may only bring a legal claim with a very good reason and the permission of the court. For example, if a debtor is seriously ill during the limitation period making it inappropriate to pursue legal action, a creditor could argue in favour of making a claim once the debtor has recovered, even outside of limitation.

However, creditors should never count on getting the permission of the court. If a debt is approaching the limitation date, creditors should seek specialist legal advice straight away to secure their position, even if they do not intend to commence legal proceedings at this stage.

Alternative Dispute Resolution (ADR)

If standard negotiations are unsuccessful, the parties may yield better results using formal methods of Alternative Dispute Resolution, such as mediation and arbitration.

Making a county court money claim

Should out-of-court settlement discussions prove unsuccessful, either because the creditor and debtor cannot agree on an adequate settlement or the debtor does not engage, the next step is to consider a county court money claim.

Creditors will need to take a cautious approach, carefully weighing up the benefits of taking further action and whether recovery is realistic compared with the costs, particularly if there is a risk that the debtor will dispute the claim.

However, applying for County Court Judgment (CCJ) can be a strong motivator for even the most evasive of debtors and creditors can continue to engage in settlement discussions even once a claim has been issued.

The county court money claim process always starts with the preparation and issue of the creditor’s claim form. However, the process from thereon depends on the debtor’s response and the circumstances of the case. For example, a straightforward case where the debtor admits the debt, the creditor will be issued judgment. Similarly, if the debtor does not respond to the claim, the creditor may apply for Judgment in Default.

However, if the debtor defends the claim in whole or part or files a counterclaim, the process can become protracted.

Our Litigation Guide has an in-depth explanation of the civil claims process, including track allocation, case management, costs budgeting, disclosure, instructing experts and preparing for trial.

Enforcement options

Being granted a CCJ does not automatically mean that a creditor will be repaid. However, it does grant the creditor further options to enforce the judgment debt, including:

  • Instructing county court bailiffs or transferring the judgment up to the High Court for enforcement by High Court Enforcement Officers – bailiffs can attend a debtor’s home or place of business to recover the debt or seize goods to cover the debt.
  • Obtaining a Charging Order over the debtor’s property – this gives the creditor a secured priority debt and improves the likelihood of getting repaid should the debtor sell their home or go bankrupt.
  • Enforcing a Charging Order by applying for an Order for Sale – it is important to note that regulated debts under the Consumer Credit Act cannot be recovered via this route.
  • Obtaining a Third Party Debt Order to freeze the debtor’s assets and allow the creditor to recover directly from their accounts.


Where an individual cannot repay their debts, a potential option is to make them bankrupt. The effect of bankruptcy is to liquidate the debtor’s assets and distribute funds between their creditors.

The basic steps to making someone bankrupt are:

  • Checking whether any other creditors have commended bankruptcy proceedings.
  • Issuing a Statutory Demand to demand repayment of the debt within a certain timeframe.
  • Issuing a Bankruptcy Petition to start the formal court process of making the debtor bankrupt.
  • Dealing with defended bankruptcy proceedings if the debtor objects to the Petition.
  • Obtaining a Bankruptcy Order – if the Bankruptcy Petition is successful, the court will issue an Order.
  • Submitting Proof of Debt to the Official Receiver to lodge the creditor’s claim for repayment of the debt.

Speak to our specialist debt recovery solicitors in London

Here we have outlined the basic options an individual or business has for recovering a commercial debt from an individual or sole trader. However, it is always essential to seek specialist legal advice about the options available in the unique circumstances of the case to give the creditor the best possible chance of recovering their money.

For bespoke high value debt recovery advice, contact Saunders Law today for a free, no obligation initial discussion of how we may be able to help.

Call us on 02076324300 or make an enquiry online.


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