You tried to recover the debt yourself. You then engaged a professional debt collection firm without success. The amount owing is large, so you are not sure whether to give up or keep going – and if you keep going what is the next step? If you do decide to keep going the next step is to commence formal legal proceedings. If you have not been involved in taking legal action against a customer before, the process can seem a bit daunting.
The following is a step by step guide of what happens when legal proceedings are commenced:
1. A lawyer will instigate legal proceedings in the form of a complaint against the company as the first defendant. If a director has provided a guarantee he will become the second defendant.
2. The complaint is usually filed in the Magistrates Court.
3. After the complaint has been filed, it will be served on both the first and second defendant.
4. On the basis that no defence is filed by the defendants, the next step is to file with the Court for a default order against the defendants. The default order shows that the defendants owe money to you (as the Plaintiff company), the amount owing (the original debt), legal costs (the fixed costs to issue the proceedings), and interest. The interest is calculated at the rate of 10.5% by the number of days between the filing of the complaint and the filing for a default order.
5. Assuming the debt has still not been paid, a ‘Warrant to Seize Property’ is prepared for Court filing. After it has been stamped By the Court, the Warrant is placed with the Sheriff’s Office for the seizure of assets at the residential property of the defendant. It is usual that the warrant comes back unsatisfied. (ie no suitable assets were identified at the residential property). You can visit the website of the Sheriff’s Office if you are interested in finding out more.
6. The warrant is then upgraded to the Supreme Court for the seizure and sale of real estate (residential property). A process is then put into place for the real estate to be auctioned. If payment is made before the auction date, the auction will not take place. If payment is not made the real estate is sold and the proceeds used to repay what is owed to you.