Best Way To Collect Retail Debt?

[Mr Kitchen]

I have been researching debt issues on this forum for a while now and feel that a request for help would be less time consuming, so here is a little background and then our problem.

 

My Wife and I are Directors of a limited company and have been trading in the kitchen business for many years. All of our business is retail and we have managed to keep trading profitably through the recession because we do a good job, offer value for money and are honest people that treat others as we would expect to be treated. We design and install kitchens including project managing the complete process from start to finish, most of our projects are in the mid to high end of the market ranging from £15K to the most recent project of £75K although we have also completed this year a couple of £5k kitchens bgecause as they say..every little helps.

 

Back in 2004 we took on a £120K complete house renovation for an english client that lived in the US but purchased a home in the UK to "do up" so when she moved back to the UK she would have the perfect home. The work commenced with a timetable and agreed staged payments throughout the 9 month renovation. Towards the end of the project her sister (who lived locally to the home) and her decided to spare no expense so accepted that the project could run up to £180k as the house was a bargain to buy and they would get their money back. They were sent prices by email and full photographic email updates during the project and were very happy with the service and quality of work.

 

The last statement supplied showed that there was the agreed £25K invoice due immediately and another Invoice due early in 2005 for the additional £25K of extras due to be paid in the spring of 2005. A cheque was received for £25K in December '04 by courier and email receipt sent.

 

The work was completed as promised and money chased a couple of times verbally and on good friendly terms. Mid 2005 the house was burgled whilst unoccupied so we were called out to put things right, they were politely reminded that there was still a large sum outstanding but in view of the emergency we would carry out the work for £975 which they agreed. Later that year they had some curtains made and fitted so now the total debt is around £31K.

 

They have acknowledged the debt is still outstanding by email so we do not believe this debt to be statute barred although they claim it is. We started to agressively chase the debt once we found out that they had sold their US business and could now affort to pay all the debt off. They are now claiming that they did send us a cheque in 2005 for £25K but we have not received anything from them and have supplied a bank statement showing this amount leaving their account but of course this could have been made to anyone and does not prove that it was paid to us. I contacted their bank who said that as the cheque was over six years old they could not provide a copy but if there was any form of fraud that they could supply a copy of the cheque. This information was passed on our client but they emailed back that they wanted to go through their solicitors.

 

We could instruct solicitors and run up thousands of pounds of costs or possibly use a debt collector, there must be someone here that has been in a similar situation that could advise us?

 

We look forward to any help you can offer.

 

Thanks in advance.

 

Steve

[BankFodder]

The first thing you need to do is to get a judgment.

Do they still own the house? If so that I would be hurrying to get a judgment and then to put a charge on the property.

Is the debt statute barred? What date is the email which acknowledges the debt? And how is the acknowledgement expressed?

[citizenB]

As they have admitted the debt during the 6 year period, then they have no recourse to the limitation.

 

There are as you probably can see around, plent of DCAs that you could chose from. Although it would simply hurt to recommend any of them !!

 

 

Could you perhaps engage the services of a "one time" solicitor that simply sends out the threatening letters - there are lots of those mentioned on these forums as well.

 

Meanwhile I will try and find some further help for you.

[Conniff]

As above. Get to the Land Registry - http://www.landregistry.gov.uk/public/faqs/how-do-i-find-out-who-owns-a-property-or-piece-of-land - (only use this web address, there are some clone sites that are nothing to do with the Land Registry and charge exorbitant prices), and confirm they own the house and get a charge on the property, that has to be a real priority and you can do the rest at leisure knowing that you will at sometime get your money.

[Mr Kitchen]

The first thing you need to do is to get a judgment.

Do they still own the house? If so that I would be hurrying to get a judgment and then to put a charge on the property.

Is the debt statute barred? What date is the email which acknowledges the debt? And how is the acknowledgement expressed?

 

Thanks for the fast reply BankFodder, what do you mean by a judgement? The debt was acknowledged in 2005 by email less than 6 months after the invoice and statement and also the following year I think twice in 2006. She states that will "settle the invoice in due course". Of course she later states that she sent the cheque in February 2005 that supposedly went missing? So these statements don't add up and she is not the sort of person that wouldn't want to know that the cheque was received.

 

Regards

 

Steve

[Mr Kitchen]

As they have admitted the debt during the 6 year period, then they have no recourse to the limitation.

 

There are as you probably can see around, plent of DCAs that you could chose from. Although it would simply hurt to recommend any of them !!

 

 

Could you perhaps engage the services of a "one time" solicitor that simply sends out the threatening letters - there are lots of those mentioned on these forums as well.

 

Meanwhile I will try and find some further help for you.

 

Thanks CitizenB,

 

I have a feeling that solicitors letters won't have much impact, they have used a solicitor to fob me off regarding Statute Barred.

 

Appreciate any further help you can offer.

 

Regards

 

Steve

[BankFodder]

If you don't understand what a judgment is then you had better start doing some homework - and quickly. You had better also start reading about what it means for a debt to be statute barred by the Limitation Act.

 

A judgment means that a court has decided that you are lawfully owed the money and that it should be repaid to you.

 

Statute barred means that the debt is no long enforceable in the court because you have allowed too long to lapse before you have brought the matter before the courts.

Forgive me, but I find it pretty amazing that you have allowed everything to go on so long when it was clear that there was going to be a problem.

I think that you have been taken for a ride - and frankly I think that you have gone along with it pretty willingly.

 

I have something to do and I'll finish off in 10 minutes

[Mr Kitchen]

As above. Get to the Land Registry (only use this web address, there are some clone sites that are nothing to do with the Land Registry and charge exorbitant prices), and confirm they own the house and get a charge on the property, that has to be a real priority and you can do the rest at leisure knowing that you will at sometime get your money.

 

Thank you Conniff, I have just paid and downloaded the registry document. It confirms their full names, lender and title number which is great. We googled the address to find that it is up for rent at the end of this month, the last rental was 12 months at £2,950 per month!

 

What do you mean get a charge? Is that through a court and does it mean court process first?

 

Regards

 

Steve

[BankFodder]

Please can you tell us eactly the date you completed the work and also the last date when you received any communication from the acknowledging the debt in some way.

[rebel11]

Whats the exact wording on the e-mail? and the date?

[Mr Kitchen]

Please can you tell us eactly the date you completed the work and also the last date when you received any communication from the acknowledging the debt in some way.

 

Yes, the main project work was completed and snagged in January 2005, that is when the final £25K was due. There was additional work requested that was carried out during 2005 and then the burglary damage in 2006 and curtains in 2008.

 

The last time the debt was acknowledged was the end of 2006 when we suggested that she contact and pay the surveyor directly as we were not prepared to run up the debt. This was when the burglers kicked down her front door the walls around the door cracked and she was worried thet there could be structual damage.

She says in an email that she thought she was sending her partner but sent to me " The last payment was made in 2005 and the total I believe I paid him was £181,000. I will need to check." That was received on the 8th April 2011.

 

Regards

 

Steve

[Mr Kitchen]

What the exact wording on the e-mail? and the date?

 

Date 30th August 2006.

 

"RE: Damage to house

 

Thank you so much. You have no idea how much I appreciate this. It has been a nightmare. I am installing a very good friend as a resident in the house next month so this kind of thing will not happen (hopefully) again. Tim and I arrive on the 15th September for three weeks. Has our architect re-surfaced? We will settle up with you in full soon (previous bill and new one) thanks for your patience."

 

Regards

 

Steve

[BankFodder]

This email will save you. It seems that they acknowledge the debt and it was sent to you slightly less than 6 years ago.

 

This means that you have until 30th Aug to issue a claim.

 

What is the value of the outstanding sum? Is it £25k?

 

Also, what is the curtain work? Was that part of the job or could they say that it was a separate job?

Edited July 10, 2012 by Conniff
typo

[rebel11]

I think you should instruct a solicitor immediately while there is a window to act, if you win you will get those costs back. I would suggest doing this yourself, but you have a business to concentrate on. That's what I would do.

[BankFodder]

I think you should instruct a solicitor immediately while there is a window to act, if you win you will get those costs back. I would suggest doing this yourself, but you have a business to concentrate on. That's what I would do.

Sorry rebel - but I don't think that this is necessary at the moment.

 

We need a bit more info first

[Mr Kitchen]

This email will save you. It seems that they acknowledge the debt and it was sent to you slightly 6 less than years ago.

 

This means that you have until 30th Aug to issue a claim.

 

What is the value of the outstanding sum? Is it £25k?

Also, what is the curtain work? Was that part of the job or cold they say that it was a separate job?

 

 

 

They stated in an email " I can't believe you are chasing this debt 5 1/2 years later!" that was back in June 2010.

 

The debt in 2005 they claim they sent a cheque for was for £25,000 but there was additional work that they requested during 2005 for outside lighting that was carried out mid 2005 and then modified in 2006 when the final bill was sent, this was for £6,500. She acknowledged the debt of £6,500 in 2007 when she requests a credit of £75 for an outside PIR light that failed, I agreed to this reduction but sarcastically remarked that this would cover my interest. Also some of the £6,500 was for the burglary damage that she has not paid for either.

 

The curtain work was paid for separately but was part of the overall project work.

 

Regards

 

Steve

[BankFodder]

This is getting into a mess.

It seems fairly clear that you are still within time, but what is not at all clear is when the 6 years expires - in other words how much time is left.

Nor is it clear how much money is owed.

I'm sorry to say that you are feeding it out in dribs and drabs - it's a bit like pulling teeth.

 

Would you mind helping everyone here who is trying to help you along byt laying it all out in a concise chronological order. Bullet pointed.

Write in out on paper and ask someone else if if makes sense and if it does then come back here.

I expect that I am not the only one here who is losing track.

 

The we will be much better placed to let you know what you might do about it and whether or not you need to start spenng money on a lawyer.

It may be that you will eventually need to see a lawyer but there is a lot you can do yourself at the beginning to save yourself money later

[Mr Kitchen]

Ok, I understand and appreciate your time.

 

1. December 2004 Statement send showing total cost £181,843 with payments to date of £136,000 balance due £45,843

2. 15th December cheque for £20,000 received and email receipt sent, agreed that the remaining £25,000 to be paid in spring 2005.

3. Outside lighting work carried out during December 2004 and client advised that the estimated cost to be £4,000 subject to how many lights and changes she makes. Work completed after several changes in mid 2005, Electrician eventually invoiced for the work late 2005 and client received our invoice early 2006 due to discussions about positioning etc.. This is normal as they would pop back to the UK every 4 months then change their minds.

4. Client chased 2005 and statement sent while additional work and snaggs were being dealt with.

5. Total cost for lighting and some extras including burglary damage repair, wiring tack room, kitchen blind, boiler service and drain work £6,517 dated 2006.

6. Client reminded in 2008 that money still outstanding and advised to pay surveyor directly because we did needing paying first.

7. Client pays for new curtains £1000 (deposit 70%, 30% on completion), separate contract. Reminder of debt attached to invoice December 2008.

8. Email sent to client in 2010 chasing debt, they are in US and not replying to emails.

9. Email and phone calls January 2011, told by partner via email that Anne will be back in the UK end of January, no reply.

10. March 2011 chased, Anne in US again, client requested full audit?

11. April 2011 chased and told that I need to supply full audit, sent then the itemised statement and back up emails that they had 3 years ago.

12. End April client states taht the final payment of £25K made in Feb 2005 and no mention of the outstanding £6,500 of extras. Client asked to send a cheque for the £6,500 seeing as it was still outstanding. They suggested that I reply to their solicitor when he gets in touch with me.

13. End August 2011 clients solicitor states that the payment of £25,000 has been made and that we should check our records.

14. August, September 2011 and then Feb 2012 email sent to clients solicitor stating that the cheque was not received, we were not told that it was being sent and we were not asked for a receipt, a first for this client. Solicitor informed that the £6,500 still outstanding and that sending a cheque in the post does not mean that the debt has been paid. Clients solicitor states that he has only been instructed to inform me the facts sent on his email and to do no more than that.

15. Client won't reply to emails and solicitor states that that is the end for him as client does not want to pay for any more work.

16. Client acknowledges debt August 2006 and won't respond regarding the £6,500 of extras including burglary repair damage!

17. Total outstanding debt £25K plus extras of £6,500 total £31,500.

18. I am looking to do something very soon hence being here.

 

Hope this helps.

 

Steve

Edited July 10, 2012 by Mr Kitchen
Update total outstanding Debt Item 17

[BankFodder]

Thanks.

 

Who is the client? Is it Anne?

You use variously "Anne" "client""partner". It isn't clear how many people you are talking about and who is the client. In whose name is the house? In whose name was the cheque?

[Mr Kitchen]

Thanks.

 

Who is the client? Is it Anne?

You use variously "Anne" "client""partner". It isn't clear how many people you are talking about and who is the client. In whose name is the house? In whose name was the cheque?

 

Deal done with Client who is Anne her partner is Tim who played little in the whole deal, Anne is the owner of a company and Tim works for her. The house is in Anne and Tim's names. The cheque and transfers were from Anne's RBS Premier Bank Account and in her name.

 

Steve

[BankFodder]

OK, so we can say that it is a joint contract and so both of them were entitled to deal with you and to make admissions.

So we can say that they are each "the client".

 

What does it mean that they requested a full audit? What is a full audit in your industry? How was this request made? In wiriting? Did you supply the audit

[Mr Kitchen]

I guess so, but Tim will have little to say about the relationship as he has to take a back seat.

 

They requested an audit which means nothing in my industry, what they have is an in depth statement showing the cost of all items supplied and fitted including labour costs. All of this work is estimated so there are no surprises for the client. They were sent the statement again with the detailed work carried out so they can clearly see what the costs are for every detail of the job. The estimated costs were then adjusted once they confirmed what sort of carpet or how many electrical sockets they required in any room for example.

 

Steve

[Mr Kitchen]

I should also make it clear that they are not disputing the work has been done, they have no reason to complain to date and I have some emails from them that make it very clear how happy they were about the work and service received.

 

Steve

[BankFodder]

Thanks - but I asked how was the audit requested. In writing? Do you have the requests? I'm wondering if the audit requests can amount to an acknowledgment that there was money outstding.

 

At the moment it is clear that you have until end August to begin a claim.

I'm trying to see if it can be argued that you have longer than that.

 

However, it is clear that they are not intending to pay you and it seems clear that they are already trying to say that you are out of time to claim your money.

 

Therefore I think that to void any argument as to what comprised the original deal and what was a completly separate deal, and to avoid lenthy arguments about what was meant by this request or that request, you should play safe and exploit the one mistake which they made - and that was the email of Aug 2006.

This seems to be a pretty unequivocal admission that there was money outstanding and that it owld be paid.

 

I think that you should send them a very short warning - 7 days and then issue a claim.

 

It is going to be messay because they will try and defend and they will try to intimidate you on the question of costs should you lose.

It is over £15k so it goes on to the multitrack and that means that if you lose you will be liable for a lot of costs.

However on the evidence that you have, the judge is unlikl.ey to be sympathetic. I think that the judge will understand immediately that these are two people who are trying to avoid paying for a decent job of work and that they are taking advantage of your naivety - because I'm afraid that is what you seem to be.

 

Because you want to avoid a fight and aslo because I'm afraid that you have contributed to this problem by encouraging in them a culture wherbey they thought that they would get away with it, I owuld offer them a discount for paying up.

 

However you mustn't let it get delayed anymore. they will take it to the wire and engage you in a negotiation - simply to waste your time and to get tot eh end of August with protracted correspondence, holidays, cheques in the post.

I'm afraid that you haven't encouraged much respect.

 

So, you will have to pre-empt them.

 

I think that you shoudl send them a 7 day LBA - no more and tell them that you are prepared to offer accept 80% of the outstanding sum in full and final settlement but that if they don't promise within 7 days to let you have the money within a further 7 days or of the money doesn't arrive, then you will sue them for the entire sum without any further discussion and that your claim will include a claim for interest - currently 8%pa.

Tell them that if they agree then you must have their undertaking within 7 days of the date of your letter and that their promise to pay must not be made wihtout prejudice or with any denial of liability.

 

Tell them that your conditions are strict and your timescales fixed and that if there is any delay or any attempt to discuss terms, then you wil issue your claim and they can then put it all before a judge.

 

Let me say, that if you aren't prepared to to this, then you had better write it off.i would aso keep a very close eye on their house to make sure that it isn't suddenly going on the market.

If you win the case - and you are very likely to do so, then you will probably have to register a charge against it.

 

All of this you can do yourself. You can start the action yourself and when you get their defence, come back here and we'lll tell you what to do next.

 

I suggest that you buy our County Court procedure guide and put in some solid bedtime reading.

 

I would also think very seriously about revising your business practices.

[Mr Kitchen]

Thanks Bankfodder,

 

I will be back in the office tomorrow so will buy your county court procedure guide and get the ball rolling in the next few days.

 

The audit was suggested by them in an email mainly due to the fact that they say they don't have records going back to 2004/5, that's why I sent them the statement and schedule of work.

 

Yes we have been niave but we had a good relationship with them over a few years and because of their US business travel it meant that things would be put on hold for several weeks at a time so it was very easy to slip into this situation however, we were good at communicating through the project and have records for every single action, suggestion, issues and estimates which hopefully will help with the court case.

 

Thanks for your help, I will keep you posted.

 

Regards

 

Steve