Just because you have lost contact with a debtor, it does not mean you have lost the option of chasing the debt – but the clock is ticking to take action before the debt becomes statute-barred.
In most cases, if six years elapse without you making contact with the debtor, you lose the legal right to pursue for repayment of the debt.
However if you have a debt that is, for example, five years old, you have a year to attempt to track down the debtor and get them to acknowledge that they owe you the money, which can in turn reset that six-year clock.
Finding a debtor
Finding a debtor who has disappeared is no easy task, but professional outsourced credit control companies can offer a tracing service to relocate a runaway debtor.
There are many different ways to do this, from public records like the phone book, to simply checking whether they left a forwarding address or changed the registered office of their company – and again, when you enlist the help of outsourced credit control companies, they will know all the tricks to try on your behalf.
Once you find the debtor, it is a case of making sure they acknowledge the debt before time runs out, so let your credit controller guide you on how best to go about doing this.
Collecting money owed
If you can get even just a small repayment towards the debt, it can prevent it from becoming statute-barred, giving you another six years to recover the rest.
Significantly, you can often add statutory interest to the debt for the full time since it became overdue – and that can add a substantial sum to the total amount you are owed.
Whether you try to recover this full amount, or you use it as a negotiating tool to encourage the debtor to pay you what they originally owed, it is a valuable bargaining chip.
Your credit controller should be able to help you work out exactly how much you can pursue the debtor for – so once they are found, you are ready to move quickly in order to achieve progress and avoid becoming statute-barred by the six-year time limit for action.
If you would like to talk to a member of our team comment in the box below or call 0808 149 3275.