As part of many credit products, you can now get debt protection. It’s simple. If you have to miss payments because of an unfortunate event, you will either be forgiven or your monthly schedule can be resumed. It’s a form of insurance.
The past months have demonstrated that uncertain times exist, so protection can be valuable. However, the keyword is “can”. It can be valuable sometimes and not always.
Your circumstances will determine whether it is. However, we can provide questions that you should ask when considering any protection offer. The rising unemployment rates might lead to more people considering these types of programs.
Debt protection insurance is designed to help borrowers by providing financial support in times of need, whether it’s due to unemployment or any other reason.
Many businesses find themselves in cash flow problems. Companies need to manage their credit and capital well.
This includes having the proper measures in place for recovering debt and minimizing the risk of late payment or bad debts.
Protecting yourself against bad debts from the start
If legal action is necessary, it will be helpful to have clear terms and conditions for payment before supply.
Arrange for the payment of a deposit or on-account payment, if needed.
Be sure to invoice regularly and keep track of the invoices until payment becomes due.
You must ensure that clients can pay quickly.
How to stay on top of your debtor management
It is important to have a person who is organized and efficient, particularly if they can foster good relationships. This will often lead to faster payments.
You must ensure that any unpaid debts are repaid regularly.
Note down all communications and any payments made.
Discuss payment plans with your bank.
A solicitor should be instructed to send you a letter informing you that legal action will be taken if payment has not been received.
What to do in the last resort situation if your debt becomes unbearable
As the litigation process is complex and time-consuming, it is important to get legal advice.
Perform investigations to identify assets against whom a judgment could be enforced and determine the debtor’s financial condition. These investigations may include company searches at Companies House, conducting Land Registry searches to determine the ownership of property occupied by the debtor, and searching the Insolvency Register. It is not worth taking legal action against a debtor who has no income or assets. Once a judgment is obtained, however, it can be used to apply for a court order to give information if the debtor believes they have assets that cannot be identified.
You should also remember that assets held by your debtor may not be in their name if they are a limited company. Even though you can obtain a County Court ruling in this case it may make matters more difficult down the road.
A County Court judgment is required to initiate enforcement actions. This judgment can then be obtained if you fail to pay within the time specified or after 14 days. There are several options.
Execution in court by a bailiff or high court enforcer they can seize and sell debtors’ goods to raise funds for the payment of judgment debt.
Order: Sums owed to debtors that are held by a third party such as a bank may be frozen or seized for the creditor’s benefit.
Attachment Of Earnings Order – money from one’s wages will be withheld to pay a judgment amount. The employer of the debtor must make payment from his wages to court. Once the court releases payment, the creditor can satisfy the judgment.
Charging Order this is a way to secure a judgment debt through imposing a charge on land or other assets. To be able to collect funds to pay off the judgment debt, the judgment creditor will need to obtain an order of sale.
If other avenues fail for any reason, and the debt exceeds PS750, then insolvency proceedings (or the threat thereof, via service of a statute demand) may result in the debt being settled. However, if this is the preferred method of debt collection, then creditors might only be able to recover a fraction.
The courts discourage insolvency as a collection tool. However, if the debt is disputed, the courts may dismiss petitions and penalize those who brought them in.