Key time limits for debt recovery claims

Ken Stangoe | Dec 2022

Every business will experience problems with late or non-payers at some point during its trading life. This can be time consuming and frustrating when what you really want to do is just get on with what your business does best.  But how long do you have to negotiate? Can you take court action to recover monies owed? If so, when is the right time?

Negotiations, delays and excuses can sometimes mean years pass before a satisfactory resolution is found when chasing invoices. It is vital that you do not miss the opportunity to be paid, which can happen if you inadvertently miss a time limit set by legislation.

Ken Stangoe, Dispute Resolution & Litigation Partner with Geoffrey Leaver Solicitors in Milton Keynes, provides guidance on the time limits for recovering business debts and emphasises the importance of taking early legal advice to avoid missing key deadlines.

Time limit for bringing a claim

If you have a client or customer that refuses to pay an invoice, then one option is to issue a debt recovery claim at court which will provide you with an enforceable judgment against that client.

However, for reasons of fairness, all debt recovery claims are subject to a time limit. It is vital that you issue your claim before that time limit expires (called the limitation period). If you miss this, your client has an automatic defence which means the debt is effectively written off because it cannot be enforced.

What is the usual limitation period for a standard debt recovery claim?

The limitation period for nearly all debt claims is six years from the date that the debt became outstanding.  The clock will stop once a claim is issued in court.

The six-year clock will also restart from the date that the debt is acknowledged in writing (including by email) or you receive a part payment against that debt.

This means that if you receive any payment against the debt at any time, then the six-year clock starts from the date of the last payment.

What are the timings required when you bring a claim?

Once a debt claim has been issued in court, the Defendant will be served with your claim. The Defendant will have 14 days to acknowledge service and indicate whether or not it intends to defend the claim. Any defence should then be served within 28 days of service of the Claim Form. The court will then set a timetable for the determination of the matter.

Pre-action protocols

Before you can bring a claim in court, you are required to follow a certain pre-action protocol. These are guidelines set by the court which have their own time requirements. The timings are similar for companies and individuals, although individuals are given a slightly wider scope. These protocols are aimed at encouraging negotiation and avoiding unnecessary court time and costs.

What happens if we do not follow the pre-action protocol?

Failure to follow the protocol will not stop a claim being brought, but any non-compliance is likely to have an impact on your ability to recover your legal costs later.

The need to comply with the pre-action protocol does not alter the limitation period. If court proceedings must be brought to avoid missing the limitation period, then you may need to apply to the court for a stay to allow for time for you to comply.

The insolvency option

If the debt is not disputed, then individual bankruptcy or company winding up may be a better option. If you would like more information on this speak to one of our dispute resolution team on how and when this might be used.

A formal insolvency process is only realistic if there is no significant dispute over the debt. If there is, then it is necessary to let a court decide this first by issuing a claim and obtaining a judgment.

When can you use an insolvency procedure?

It is not necessary to have a court judgment first. You just need to prove the debt is owing and that, even if it is partly disputed, the undisputed part must amount to over £750 for a company, or over £5,000 for an individual.

Timings and the conditions for bankruptcy or winding up

The limitation period is six years from the date the debt became due.

The statutory demand

You must first serve a statutory demand to an individual, giving them 21 days in which to pay or dispute the debt. They have 18 days to apply to ‘set aside’ that demand if it is disputed by them. Once 21 days has passed and you have not been notified of any application to set aside the demand, you can issue a petition.

It is not essential to send a statutory demand to a company first, but it is a very good way of establishing that you have an unpaid debt, which is essential for winding up.

The winding up petition or bankruptcy petition

Once a petition is issued then there are strict dates for service and advertising prior to the hearing in court. Your solicitor can ensure that everything is covered, so the petition is not rejected on the day of the hearing.

With an undisputed claim, you are unlikely to have a hearing for at least six weeks from issue, depending on the court timetable.

The options when you are coming up to the limitation period

If you are getting close to a limitation period, then speak to us about issuing court proceedings to stop the clock and preserve your rights.

The options when the limitation period has passed

Technically you can continue to ask for payment. However, you do not have any enforcement options if they refuse. You may still have some negotiating power however, such as agreeing to continue to work with that client if they meet arrears within a specified time.

How we can help

Making a claim to recover a debt is not straightforward, with several options available, all with their own processes and time limits to follow. By taking legal advice early you can assess the most appropriate and cost-effective option for your situation and ensure that you do not fall foul of time limits that might prevent you from recovering your debt.

For further information and assistance, please contact Ken Stangoe in the Dispute Resolution team on 01908 689307 or email  Geoffrey Leaver Solicitors has offices in Milton Keynes, Buckinghamshire.


 This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.


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Ken Stangoe

Ken Stangoe | Partner

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