Over the past two months I have visited businesses at New Spitalfields Market and New Covent Garden Market.
I expected to hear stories about difficult debtors. What surprised me were some of the stories I heard about the debt collectors.
£3,000 to Collect a £20,770 Debt From a Company in Liquidation
One market trader paid a debt collector £3,000 to collect a £20,770 debt.
The debtor company was already in liquidation and there was no Personal Guarantee from the director.
In those circumstances, the debt collector had no realistic route to recover the debt from the company. Any recovery available to the creditor is depended upon the liquidation and whether the Liquidator ultimately is able to distribute a dividend to unsecured creditors.
Yet the trader tells me this was never explained. Six months later, there has been no progress, few updates and questions left unanswered.
The client should have been told the position before £3,000 was taken from them.
“Spray and Pray” Debt Collection
Another approach I encountered was straight to the doorstep.
No pre-collection letters. No opportunity to gather intelligence from the debtor’s response and insufficient investigation beforehand. Knock on enough doors and inevitably some low-hanging fruit will pay.
But when a debt becomes difficult, being a one-trick pony becomes a problem.
One trader was referred to an expensive solicitor and charged £1,600 for a letter threatening bankruptcy. Master Collections can pursue a Statutory Demand at considerably less cost and, where a Bankruptcy Petition becomes necessary, we have access to No Win No Fee solicitors.
A debt collector who doesn’t understand legal and insolvency recovery cannot effectively scrutinise the advice and costs of solicitors they refer clients to.
I can. I am a Legal Executive and previously worked in private practice.
At Master Collections, the doorstep is a recovery tool — not the entire toolbox.
Get Liability Wrong and Everything Falls Down
Another trader supplied their debt collector with a Credit Application clearly identifying the company liable for the debt.
The instructions weren’t followed.
Proceedings were issued against the restaurant’s trading name instead of the company liable for the debt, and a CCJ was obtained against the wrong entity.
A Payment Plan was obtained, but the debtor later defaulted because, on balance, they knew there was nothing the debt collector could do — the CCJ was against the wrong entity.
Time and money wasted because liability wasn’t established correctly at the outset.
At Master Collections, we follow instructions, scrutinise the documents and establish liability before proceedings are commenced.
Get liability wrong and everything falls down.
Enforcement Means Enforcement
Payment Plans have their place, but our Enforcement Officers attend with the objective of Payment In Full.
Where appropriate and legally available, they are prepared to take control of goods and use the enforcement powers available to force the issue.
Our Enforcement Officers are experienced at enforcing CCJs at restaurants and other businesses open to the public.
They aren’t easily fobbed off.
Why Master Collections?
Debt collection isn’t rocket science, but it requires more than knocking on doors.
Establish liability. Gather intelligence. Understand the debtor. Choose the right recovery route. Enforce robustly. Keep the client informed.
And if there is no realistic debt collection route, tell the client before taking their money.
My visits to New Spitalfields and New Covent Garden Market have reinforced something I have believed for a long time:
Not all debt collectors are equal.
Carlo Pegna LL.B (Hons), FCILEX, MCICM
Master Collections
Need a Different Approach to Debt Recovery?
If your current debt collector isn’t delivering results, keeping you informed or giving you clear advice on the best route to recovery, perhaps it’s time for a different approach.
Call Master Collections on 01920 481467 to discuss your outstanding debts and how we can help.
Master Collections — Collecting Debts Where Others Fail.