Debt Recovery News – Increase in Civil Proceedings fees

A practitioner within the Debt Recovery industry from a firm based in Leeds has said this week that the latest increase in Civil Proceedings fees, implemented in April, will effectively encourage people to run up debts as the cost of recovering monies owed rises.

The Leeds based commercial debt recovery solicitors stated via their own website and on credit and debt sites that:

“The increases, set out within the Civil Proceedings Fees (Amendment) Order 2011, range between 10-25%. As the cost of recovering debts becomes higher, this may well encourage some people not to pay up as they realise the likelihood of those debts being chased is going decrease,”

Whilst fees incurred are, and always will be a consideration for creditors in pursuing debts owed to them, so to would be the likely outcome should the case proceed to court, and the ability of the respondent to pay the sum owed, should the order be granted in the claimants favour.

How big is there fee increase?

The Lord Chancellor announced an increase in civil court fees which came into force on the 4 April 2011.  According to official press releases on the subject, the lowest fee for claims up to £300 in value will rise £5 to £35, an increase of 16%, and the highest fee for claims, those valued over £300,000 will rise £140, an increase of just less than 10% to £1670.00.

Many would argue that a £5 increase in Court fees, (which may or may not be known to a debtor in any case) would offer very little incentive (all things being equal) to not repay the debt under belief that such an increase in fees (i.e £5) would deter creditors from pursuing the debt?

In our experience and those shared by most of our peers, this would not be considered an obstacle to clients. Many creditors would share the view that a £5 increase in fees to have a £300 debt settled is a small price to pay and when we consider that if a debtor owes £300,000 are we really meant to take the belief that an extra £140 in fees will deter creditors from pursuing someone for £300,000 owed to them?

And from the debtors perspective, are we to understand from the statement by the Leeds based debt recovery firm, that individuals and firms are now to reconsider maintaining a good credit record and start running up £300,000 debts with no intention of paying the debt back in the belief that a creditor will now be deterred by a £140 rise in fees?

Sorry, but we have yet to find someone who agrees with this statement.

At CCDR we have an excellent success record and we pride ourselves on our professionilsm and whilst we will undertake debt recovery proceedings via the courts, we also offer a frank and honest assessment of the merits of each indivudal debt recovery case as in many circumstances, debts and even aged debts can be settled without the need for court.

For more details on our services such as Outsourced Credit Control, Debt Mediation, Debtor Tracing and Commercial Debt Recovery, our No Recovery No Fee basis, or to discuss the merits of your individual debt case feel free to get in touch.