Small debts claims: Click and collect

Three thousand pounds sounds like quite a lot of money to most people. It does to me. I might not stop to pick up small change, but £3,000 is a different matter. So when someone doesn’t pay my invoice for that sort of sum I feel quite upset. I suspect you do too.

But what can you do? You write a gentle reminder. Then you write a less gentle reminder. You threaten legal action. If that doesn’t do any good, most of the options available to you seem very expensive.

You can pass the invoice to a debt collection agency, but they will want to take a chunk of the proceeds. You can talk to your solicitor, but by the time the file has been opened the meter is running very fast. Adjudication is far too expensive. You could send the lads round with a baseball bat, but that might go badly wrong.

Before you write the debt off, take a look at www.gov.uk/make-money-claim-online, the do it yourself court proceedings website. It makes small debt collection through the county court seem very simple, quick and (best of all) cheap. That’s what I did just before Christmas when someone forgot to pay my fee as an adjudicator.

The first time you do it, you have to register. You are given the usual ID and password, and then you can get on with it. The website suggests that the process of issuing a claim takes no more than 20 minutes, but in fact it is quicker than that. Because the website will remember who you are, its even quicker the second time you use it.

You fill in the name and address of the debtor, what the claim is for (you only need very brief details) and how much is owed. You can add a claim for interest - the website tells you what the appropriate rate is (often 8.5%). Then you pay your court fee by credit card. On a claim for £3,000 issued through the online process it will be £100. The court fee is added to the sum payable by the debtor. You press the Send button. Off it goes.

Within a few days, formal court papers will be generated in the Northampton County Court. This may come as a surprise if your business is in Bristol, but don’t worry, all the online claims are processed in Northampton. The papers are sent off to your debtor, who will have 14 days to notify the court if it intends to defend the claim.

If the debtor doesn’t respond within that period, you will be entitled to enter judgment, which you do by filling in another form online. Once you have a judgment there are several procedures you can use but typically you would instruct the court bailiff to call at the debtor’s address and collect either the cash or whatever goods can be found there.

If the debtor tells the court that it intends to defend (as mine has), it will be given another 14 days to send in details of the defence. If it doesn’t do so, you will be able to enter judgment as before. If it does, then the case will be transferred to a county court near you, or near the debtor if it is an individual. Both parties will be sent a questionnaire so the court can understand what the dispute is all about and decide how to deal with it. A claim for less than £5,000 will normally be put on what is called the Small Claims Track, which is designed for parties acting for themselves without lawyers. The court may decide that it can deal with the case purely on the basis of the documents and a hearing will not be necessary.

If a hearing is necessary, it will be relatively informal. It will be held in the judge’s office, not a large courtroom, and will be no more intimidating than an ordinary business meeting. There will not be a wig or a gown in sight.

If you are claiming more than £5,000, the arrangements for trial will be more complicated and you may want professional help, but you could start the case off online and bring in the lawyers later if necessary. You can use the online procedure for any money claims up to £100,000.

There are over 1,000 cases issued this way each month. In 80% of cases they aren’t defended and you get your judgment within a few weeks. I’m having to wait a bit longer, but with interest running at 8.5%, I’m not too worried.

John Redmond is a consultant at Osborne Clarke