Industry warning: beware of dodgy debt collectors
Have you lost money with a bad debt or had a customer who has flown the nest without paying their bill?
Monday, 27 Jan 2014 16:19 GMT
Bad news: don’t compound bad debts with bad debt collectors says ICSM
It is a sad fact that almost every sign-making firm will have had their fingers burnt with a client who has failed to come up with the ackers. If the outstanding unpaid amount is bad enough, then spending time and money chasing the offender adds insult to injury. Once the client company folds it is rare for a print firm to get much if anything from the liquidation.
It can be tempting to chase the directors of a bust company but experience tends to show this is a lost cause. What is more tempting is to get someone else to chase them for the cash—but a credit management firm has issued a warning about this practice as there are rogues about.
Credit management company ICSM have spoken to various printers who have been stung in the scam by the rogue debt collectors. ICSM’s Rupert Rudd says: “They may quote section 214 of the Insolvency Act, which deals with wrongful trading and which states that any director of a company that allows that com-pany to continue trading whilst knowing that it is insolvent may be guilty of wrongful trading. Furthermore, that such a director could be held liable for the debts incurred by that company during the period of wrongful trading.
Rudd says that ICSM has heard of figures of more than £600 requested by the rogue debt collectors as a deposit with demands for more cash up front to cover court fees”
“They may seek to convince you that no director can possibly be unaware of the state of their business prior to calling a meeting of creditors - or even to the appointment of a receiver or administrator - and therefore that they can be accused of wrongful trading and made personally to pay the debt due to you.
“Most likely they will have stumbled across your name on a creditors' list of a failed company and will know that you have been hit. They will make an educated guess from the size of your business in relation to your loss how serious the situation is for you.”
Rudd says that ICSM has heard of figures of more than £600 requested by the rogue debt collectors as a deposit with demands for more cash up front to cover court fees. He gives this advice: don’t pay anything up front, ask for references and a copy of the contract for your solicitor to peruse, and don’t sign any-thing. Reputable debt collection agencies usually work on a no-collect-no-fee basis.
