In the UK, several laws and regulations govern the process of B2B debt recovery to ensure it is conducted fairly and legally.
Here is a list of some of the UK’s key debt recovery laws and regulations you should be aware of:
Limitation Act 1980
This law sets out the time limits for taking legal action to recover a debt. For most types of debts, such as B2B commercial debts, the limitation period is six years from the date of the default on payment.
If a debt is older than the limitation period, the creditor may be barred from taking legal action to recover it. This is often referred to as a “statute-barred” debt.
Pre-Action Protocol for Debt Claims
Creditors should send a detailed “letter of claim” to the debtor, outlining the debt and giving the debtor a reasonable amount of time to respond (usually 7-14 days for B2B debt). This encourages early settlement and reduces the need for court action.
Alternatively, for undisputed B2B debts there is the option of pursuing the matter by way of a statutory demand rather than a letter of claim.
County Courts Act 1984
Creditors can use the County Courts Act to obtain a County Court Judgment (CCJ) against a debtor. This judgment legally requires the debtor to repay the debt. If the debtor does not comply, further enforcement actions, such as bailiffs, can be used.
Late Payment of Commercial Debts (Interest) Act 1998
This law applies to business-to-business transactions and provides a statutory right to claim interest and compensation on overdue payments.
Creditors can potentially charge interest (currently 8% above the Bank of England base rate) and claim reasonable debt recovery costs if a business customer is late paying as well as a set rate of compensation for late payment.
Professional debt recovery services in the UK play a crucial role in ensuring compliance with the above regulations and laws. By adhering to these rules, they protect you from legal pitfalls, such as breaches of privacy, harassment claims, or unfair practices
that could result in costly litigation or reputational damage. Axis Professional offers expert debt recovery services tailored to meet your specific needs, utilising a deep understanding of the legal landscape to recover outstanding debts efficiently.
