Recovering Debt Abroad
If you are a creditor you will still be able to recover your debt and the costs are not as prohibitive as you may think.
In particular this is easier if the debtor is within an EU country; the country has a reciprocal agreement and/or you have a term in your contract submitting the relationship to the courts of England and Wales.
How do you recover your debt?
You can issue a claim in the UK if your contract stipulates it has exclusive jurisdiction or it is a restitution claim to recover monies due to you, say as a consumer, or it is a claim for a refund and either:
- The Debtor is within a member of the European Union and your country falls within the Council Regulation (EC) No 44/2001 then permission to serve the claim form outside of the UK is not even required and enforcement is automatically permitted. This makes issuing a claim for an outstanding debt relatively simple and cheap for the creditor; or
- The debtor is in a country, outside the EU, but it has a reciprocal agreement with the UK, such as Canada. This enables you to track down your debtor and enforce your claim in that country in much the same way as above we just need to secure the courts permission first, which is again a simple form and small nominal fee. There are many countries where this is possible and you should check this before enforcing the debt.
To file a claim in England you simply issue this with a few additional forms, but with no extra substantial court cost. If the Debtor cannot or does not dispute jurisdiction nor files a defence the creditor has a direct route to enforcing the judgment. If a defence is filed it will be heard here. Once judgment is received and sealed as ‘enforceable abroad’ enforcement action can then be taken in the debtor’s country of residence or company registration.
The only delay is possibly service of the claim form and the time they have to acknowledge service and/or file a defence as this varies from country to country and some can be more exhaustive than others.
If your debtor is found within a non-EU country, there is no reciprocal agreement and its not part of any applicable conventions then we would advise you further.
Finding the debtor
The ability of a creditor to now trace a debtor is far more advanced and vast due to the growing number of debt collection resources and agencies being made available. There are many ways to trace a debtor, from hiring a private investigator, to internet and company house checks to simply going to the last known address and talking to the neighbours. Traces can also be made of a debtor’s ATM or credit card, which may also be available.
How long do you have to find them and enforce the debt?
A creditor has only 6 years from the date of the debt becoming outstanding or an agreement being met to recover the monies. However, if a claim or other form of legal action is taken then the debt can be legally recoverable indefinitely and the creditor can continue to actively search for the debtor beyond this period.
What should you do if you are a Creditor and the Debtor has fled abroad?
You should initially use the available resources to identify the location and available assets of the debtor. Next , if able, we advise you to issue a claim in the UK courts (seeking permission if required) and serve this on the debtor (through the high court foreign office or an agent) and if they do not respond obtain judgment and seek advice on enforcing it in the debtor’s country. Please note the rules of enforcement vary from country to country and advice should be taken. We offer this service for our affiliated countries and have employed associates to deal with other countries in the EU. This article will not apply to debtors who have assets in the UK that we can enforce the judgement upon as this will warrant straightforward UK enforcement procedures.