You can ask our online solicitors for advice on debtor finance using the question box on the front of our website or the following free legal advice guide may answer your questions. 

Before commencing a court claim against someone who owes you money, it is important to investigate whether the debtor finances are adequate to settle your claim. The legal process would prove costly and time consuming if you succeed but you cannot recover the money because the debtor doesn’t have any funds to repay the outstanding amount.

There are many different ways that you can find out whether a debtor has money to settle your claim including:

#1 A Credit Check

This is an effective way to find out about the financial status of a company or individual. Fees are normally payable to undertake a credit search and the amount of information that you can obtain will vary.
Typical information that you can find out through a credit search will include the following:

• The full trading name of the business or the full name of the individual
• Current and previous address
• The date that the company was incorporated or the date of birth for the individual
• Where the business is a limited company, you can obtain a summary of their most recent accounts which were filed with Companies House
• Information concerning any bankruptcies, Individual Voluntary Arrangements (IVA) or County Court Judgements (CCJ)
• Information about any mortgages or loans held by the individual
• The credit score or rating for the business or individual

#2 A Company Search

If the business is a registered company specific information can be obtained from Companies House. Some information you can review free of charge while other pieces of information will incur a fee. The information that you will be able to review will depend on several factors such as the type of the company, when it was incorporated and how big the company is.

Information that you can obtain free of charge from Companies House includes:

• The name and registered address of the business
• The company number
• The status of the business, including whether the business is currently active or whether it has been dissolved, struck off, liquidated or placed into administration
• The date the company was incorporated
• The country where the company was set up
• The type of business and nature
• Accounting reference dates along with a copy of the latest accounts which were filed with Companies House. You will also be able to see the due date when the next set of accounts must be filed.
• The date of the latest annual return that was filed with Companies House and the date of the next return
• Any names that the business has been known by

If you pay a fee, you can find out the following information:

• Actual copies of accounts which have been filed at Companies House
• Information about shareholders and directors
• Details about any mortgages or charges held by the business

However, when you obtain information from Companies House you should be aware that the information you view may not be up to date. As an example, the financial position of a company may have changed considerably since the last time they filed their accounts.

If a business was registered outside of the UK, it is normally possible to find information from the country of registration. Nevertheless, the quantity and quality of the information that you can obtain will vary depending on the country.

#3 Searches with the Land Registry

A search through the Land Registry will help you identify whether the business or individual owns any property. An ‘Office Copy’ can be obtained from the Land Registry which will confirm the owner of a registered property. The majority of properties in the UK are now registered with the Land Registry, and there is a small fee for obtaining this information.

Office copies will also confirm whether there are any mortgages or charges secured on a property and the date of purchase in addition to providing details on the owner of the property. Where property was purchased anytime after December 1994, the office copies will also display the amount paid for the property.

Office copies however will not tell you how much is outstanding on any charges or mortgages, but they may be able to provide enough information for you to determine whether there will be enough equity in the property. Where a property was purchased many years ago and there are no mortgages currently on the property, more often than not there will be some equity in the property. You can also research online to see the value of neighbouring properties but you should keep in mind that neighbouring properties may differ in terms of size and quality.

If the debtor owns a property with someone else, it is always worth remembering that you can only enforce any judgement that you receive on the share that they own.

#4 Individual Insolvency Register

Searching this register will provide confirmation of whether an individual has been made bankrupt or they are subject to an order for bankruptcy. This type of search can be carried out free of charge through the Insolvency Service website.

#4 Enquiry Agent

An enquiry agent or private detective may be able to find out additional information about the debtor such as what assets they may have or whether they are in employment. The charges incurred for an enquiry agent will vary depending on the nature and complexity of the work that you require and how easily it will be to obtain the information.

It is always worth investigating before starting a claim against a debtor, but it is important to understand that financial circumstances can change. Even if you do prove that a debtor has adequate finances to repay the debt, by the time the case reaches court the situation may be very different.