× Post questions here about other issues concerning late payment.

Recovery costs for late payment

More
6 years 11 months ago #989 by ashley smith
Well done June.

I would add for future readers of this thread one point not raised.
If the Agency had collected the debt and the debtor paid stating it was 'In full and final settlement' you may not have been able to proceed with the claim for interest and charges.

This raises a point for people who do receive payments which debtors claim are full and final (eg. in an attempt to stop the creditor pursuing what is justly right), Should you bank it or not?

Historically not you should have returned the payment !

Recent court cases have however overturned this but be warned... Time is of the essence. If you do bank the cheque you must do so IMMEDIATELY on receipt AND write to the debtor stating

1) you reject the full and final offer
2) have banked the cheque as PART PAYMENT for the outstanding amount

then for good measure advise the outstanding amount, including interest and late payment charges. (remembering interest runs on the WHOLE debt and not the part received amount)

Please Log in or Create an account to join the conversation.

More
6 years 11 months ago #990 by Littlemac
Some good information here Ashley. Many thanks.

I am certainly learning as this topic has progressed. Everyone has been very helpful and without this support we would certainly not have been able to have the success we've had.

Could I just make sure I've interpreted correctly the part about the interest running on the whole debt and not the part received amount. Does this mean that even when a debtor makes a part payment the statutory interest will continue on the original amount owed until it is completely cleared, and does not take into consideration the part payment?

Interesting!

Many thanks.

Regards
June Davison

Please Log in or Create an account to join the conversation.

More
6 years 11 months ago #991 by ashley smith
In theory yes,

Interest is calculated on the Principal amount x number of days outstanding. I have trawled through the act's wording and the only mention how to deal with part payment is that it should be used to offset any outstanding interest first then compensation. It could be argued that once these are cleared then the principal is reduced and thus so should the interest (which goes against what i posted earlier). Ultimately it would be up to a defendant to use this as a reason to reduce the interest charge and for a judge to agree.

Since the act is not clear on this point it could also be argued that the Act clearly states interest is due on the Principle, and not on the Part Principle, similarly the Act does not state that following part payment the interest should be recalculated.

So what should you do? Personally I would go for the full amount in the first instance on the basis that the Act is desigend to be a deterent to force cultural change to Late Payment. But be prepared to concede

Please Log in or Create an account to join the conversation.

More
6 years 11 months ago #992 by David J
Hello June
The way the advanced calculator is set up is to pay the interest and compensation first, then the principal. In the case of a part payment OR payment of the principal but not the interest and compensation (which happens a lot) then the balance of the principal would continue to accrue daily interest on original amount of the principal.
Now if the debtor made a part payment within your agreed credit terms but failed to pay the balance, then I would think it fair to claim only on the amount owed. But if they made a part payment outside of your agreed credit terms but before you had made a claim, then I would claim on the full principal.
The above demonstrates how a simple case of making a claim can become stupidly complicated!
It is less complicated than having to re-calculate daily interest rates then inform the debtor of the revised rate and balance of the principal still owed. As Ashley says, go for the full amount every time.

Regards


David

Please Log in or Create an account to join the conversation.

More
6 years 11 months ago #995 by Littlemac
Hi David

Many thanks for your interesting response. I have to admit everyone has been very helpful and all the information thus far received has been extremely beneficial to us.

Regards
June

Please Log in or Create an account to join the conversation.

More
5 years 3 months ago #1694 by SSPLTD
We're experiencing the same situation.

Our terms do include the fact that the overdue accounts are passed to a debt recovery company and their costs are immediately added to the debt.

Despite this, our customer paid us by BACS not the debt collection agency, and have refused to pay their costs.

We have paid over £200 in costs, and he DCA have closed the file, and the contract was dated after the late payment act changed.

Do I now issue my own court papers to recover the costs.

Please Log in or Create an account to join the conversation.

Time to create page: 0.115 seconds