It has been announced that the Ministry of Justice (‘MOJ’) is to increase civil court fees, which will no doubt be a further headache for creditors who are planning to issue claims for debts in the High Court or County Court.

March 2015 saw the MoJ introduce a new change in the way that issue fees are calculated whereby claims exceeding £10,000 now attract an issue fee equal to 5% of the value of the claim. This has meant that in some cases the fee has risen by nearly 400%. The only crumb of comfort for creditors is that the fee has been capped at £10,000 for any claims over £200,000, although under the new proposals the MoJ has announced an increase of this cap from £10,000 to £20,000. This new increase will generate £48m extra revenue for the MoJ.

Meanwhile, the MoJ has also confirmed further increases in respect of the following:

• possession claims in the County Court (up from £280 to £355);

• general applications in civil proceedings (up from £50 to £100);

• applications by consent (up from £50 - £100); and

• applications that require a hearing (up from £155 to £255)

As can be seen debt collection has become a whole lot more expensive!

With this in mind it is suggested that creditors should be tightening their credit control procedures and ensuring that debts do not reach the values which the revised court fees attract. Creditors may also want to make the debtor aware of the size of the court fee that will be incurred and they will ultimately liable for in the event the claim is successful. This may encourage a debtor to pay pre-litigation.

Creditors will probably want to put greater empathise on pre-legal collection works. They may also consider passing the debt out for pre-legal collection as soon as it becomes apparent that the debtor may have financial difficulties. Debtors are usually more inclined to pay when they realise that the creditor has instructed a debt firm and has become serious about recovering the debt.

In the event that a creditor has no choice but to issue proceedings, the creditor should think carefully about which debtors they choose to pursue. Before making a decision to proceed, they should carry out more due diligence on the debtor; for example performing credit checks and making a call to the Central Index to ensure that a winding-up petition has not been presented in the case of a company. In the case of an individual, creditors can carry out checks on the insolvency register to make sure that the individual is not bankrupt.