Debt Recovery Costs: Legal Costs Recovery and Negotiation


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If you wish to speak to a solicitor about making a debt recovery claim

Debt Recovery

Recovering debts in England and Wales involves a legal process designed to enable creditors to retrieve money owed to them by debtors. The process can be complex, and the appropriate steps can depend on the specific circumstances of the debt, such as the amount, the type of debt, and the nature of the relationship between the creditor and debtor.

Before applying to the Court, creditors are encouraged to follow the “Pre-Action Protocol for Debt Claims.” This protocol outlines the steps creditors should take before initiating court proceedings, including sending a detailed Letter of Claim or Letter before Action to the debtor, allowing them a reasonable time to respond.

Outlined below is a general overview of the process:

Informal Negotiation:

  • Before resorting to legal action, creditors often attempt to negotiate a settlement with the debtor, whether that’s requesting payment in full, partial payment, or a payment plan.

Letter Before Action/ Letter of Claim:

  • If negotiations fail, the next step is often for the creditor to write to the other side, sending a formal ‘Letter Before Action’ or Letter of Claim to the debtor. This letter sets out the details of the commercial debt, what the debtor is required to do, and the consequences if they fail to comply.

If the recipient is an individual, they are given 30 days to reply to the initial letter, but they can opt to prolong this period by an additional 30 days. Conversely, if the entity is a company, they are allotted 7 days to respond, and they cannot extend this duration.

Issuing a Claim:

  • If the debtor does not respond to the Letter Before Action /Letter of Claim, or fails to pay, the creditor can initiate a legal process by issuing a claim in the County Court. The debtor will receive a ‘Claim Form’ and a ‘Particulars of Claim’ setting out the case against them. The creditor should respond to the claim within 14 days of receipt of instructions.


  • If the debtor does not respond to the claim form or fails to defend against it, the creditor can apply for a default judgment.
  • If the debtor does respond, the court may set a hearing date, and both parties may need to provide more information or evidence. After the hearing, the court can make a judgment on the case.


  • If the creditor is awarded a judgment and the debtor still doesn’t pay, the creditor can take steps to enforce the judgment. There are various methods available including, warrants or writs for auctioning seized goods, direct wage deduction orders, bank fund freezes, asset-backed security orders, and more extreme measures like bankruptcy or company winding-up.

Statutory Demands and Insolvency:

  • If a debt exceeds a certain amount, a creditor can serve a statutory demand on the debtor. If the debtor fails to pay within 21 days or challenge the demand, the creditor can begin bankruptcy proceedings (for individuals) or winding-up proceedings (for companies).

Alternative Dispute Resolution (ADR):

  • Before or during the legal process, parties might consider methods such as mediation or arbitration to resolve the dispute. ADR can often be quicker and less costly than court proceedings.


Debt Recovery Costs

Debt recovery costs can vary depending on the route taken, the complexity of the case and the level of debts being recovered. Solicitors usually charge a fixed fee or hourly rate for debt recovery services.

Solicitors may also be able to claim debt recovery costs from the losing party if they are successful in their case. For cases up to £100,000, fixed recoverable costs are likely to apply.

If the case is allocated to the Multi Track, likely applicable in cases exceeding £100,000 in value, or involving complex circumstances, standard costs will apply, and Solicitors will be able to recover costs for their services at an hourly rate, in addition to disbursements such as Court fees and expert witness fees.

To claim standard debt recovery costs, the Detailed Assessment Procedure must be followed. To initiate the process of Detailed Assessment, the receiving party must serve their Bill of Costs alongside a Notice of Commencement upon the paying Party.

If the paying party wishes to dispute the costs listed within the Bill, the will be required to serve their Points of Dispute upon the Receiving party within 21 days. If Points of Dispute are not served within this period, the Receiving party can apply for a Default Costs Certificate. This will enable them to recover all costs listed within the Bill.

The receiving party can further negotiate costs with the paying party by serving replies to Points of Dispute to respond to the legal arguments made. Parties should attempt to come to an agreement as to costs using this process before proceeding to Court. If an agreement cannot be reached, the receiving party will be required to make an application to the Court to arrange a Detailed Assessment or Provisional Assessment Hearing.


How can ARC Costs Assist with Debt Recovery Costs?

ARC Costs can assist will all aspects of claiming or defending debt recovery costs.

ARC Costs are a team of independent and experienced Costs Draftsmen and Costs Lawyers who regularly assist you in the recovery/contention of costs.

Whether you are the Paying Party or the Receiving Party, we hold vast experience in dealing with costs matters on both sides.

We can assist in fixed recoverable costs cases and cases where costs are awarded on the standard basis, including the preparation/challenging of Bills of Costs, conducting of detailed assessment proceedings, and the preparation of Points of Dispute/Reply.

Should you require our assistance or have any further queries regarding costs, please contact us on 01204 397 302 or email one of the team at Alternatively, please complete our online enquiry form, and we will contact you to discuss your query or speak to our staff using the live chat function.

If you have a claim for debt recovery, ARC Costs also maintain an extensive legal network of expert Solicitors in this area, and we would be happy to pass on your details to assist in recovering your outstanding debts. 

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.


Request Your Free Quotation

Contact us today for your free, no obligation quotation. Our team are on hand to help.


4 Bark Street East, Bolton, BL1 2BQ

01204 397302

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