Debt collection agency for individuals: chasing a person for a business debt
When the person who owes you money is an individual rather than a company, the route is the same but the rules are tighter. You can use a debt collection agency to chase an individual, and many will, but the Pre-Action Protocol for Debt Claims applies, the debtor must be given 30 days to respond to your letter of claim, and you should expect a more careful process than you would get with a limited company. Here is what changes and how to choose.
Who counts as an individual debtor
“Individual” covers more than one kind of customer:
- A private client you did work for, such as a builder, designer, tutor or tradesperson owed by someone who is not running a business.
- A sole trader, who is the same legal person as their business. See who you can chase when a sole trader or partnership does not pay.
- A director who gave a personal guarantee, or who signed the contract in their own name.
- A former tenant or someone on an instalment arrangement that has stopped.
The first and last are not business-to-business debts. That matters for interest: statutory interest at 8% plus the Bank of England base rate and fixed late payment compensation apply to business-to-business debts only, so do not add them to an invoice for a private client. Use the interest and charges your contract actually provides for.
What the Pre-Action Protocol means in practice
For an individual, including a sole trader, your letter of claim should give 30 days to respond, and enclose the information sheet, reply form and financial statement form. The detail is in our plain-English guide to the Protocol. From 1 October 2026 the letter of claim should also go by email where you hold one.
A good agency that handles individuals will build this into its process, which is one good reason to use one: getting it wrong can cost you at the costs stage even if you win. If you are writing the letter yourself, start from what a letter before action should say.
Your options, in order
- Check the basics. Is the amount correct, is it undisputed, and do you have the contract, invoice or messages that prove it? A genuine dispute is a court question, not an agency one: see what to do when a customer disputes the invoice.
- Write a clear letter with a deadline. A proper, polite, formal letter with a deadline is a stronger step than a fourth reminder.
- Offer a realistic payment plan. If they cannot pay in full, whether to accept instalments is a decision to make deliberately, in writing.
- Hand it to an agency. Worth it when you would rather not be the one chasing, the amount justifies the fee, or you have tried the above and it has stalled.
- Issue a court claim. England and Wales small claims generally cover debts up to £10,000, with the issue fee banded on a published court scale. Scotland’s Simple Procedure and Northern Ireland small claims go up to £5,000. Compare it with an agency in debt collection agency vs small claims court.
When an agency makes sense for an individual
An agency is most useful when the amount is large enough to be worth a fee, the person is contactable but avoiding you, and you want the pressure applied by someone professional. It is less useful when the person cannot be found, or the debt is small enough that costs outweigh recovery: see debt collection agencies for small debts, where debts owed by individuals generally need to be larger than business invoices. A debtor who has vanished is a tracing problem first: read what to do when they disappear.
Limits to keep in mind
Time runs: in England and Wales the limitation period is six years, restarted only by a signed written acknowledgement or a part payment made before it expires. See how long you can chase an unpaid invoice. And an individual’s circumstances change what is realistic, so be honest about whether they can pay before spending money chasing.
Next step
If a person owes your business money and you would like it handled professionally, compare vetted UK debt recovery agencies on Collect Compare, with names hidden until you choose, or let us match you to the right one. It is free for creditors.
This is general information, not legal advice. How you may recover a debt from an individual depends on the facts and the type of debt, so take advice before taking formal steps.
Frequently asked questions
Can a debt collection agency chase an individual for a business debt?
Yes. Agencies collect from individuals as well as companies, for example a private client who has not paid for work you did, a former customer on an instalment plan, or a sole trader. Because the debtor is a person, you (and an agency acting for you) should follow the Pre-Action Protocol for Debt Claims and treat them fairly, which means a more careful, letter-led approach than with a company.
Do I need a county court judgment before an agency can act?
No. Most agency work happens before any court claim, and a good agency will often get a result without one. A judgment becomes relevant if the debtor ignores everything, because it opens up formal enforcement. An agency can tell you at the outset whether it expects to need one.
Will the debtor have to pay the agency's fees?
That depends on the contract. The debtor owes you the debt, and whether collection costs can be added to it depends on what the contract allows, so do not assume they can. Your agreement with the agency decides how its fee is charged to you. On a Collect Compare introduction you pay nothing to compare; the agency you choose pays for the introduction. Check any agreement for how fees are taken from what is recovered.
Is it worth chasing an individual who may not be able to pay?
It can be, in smaller amounts over time. If the person can pay something but not everything at once, a structured plan that is actually kept is worth more than a larger sum that is never collected. If the person has genuinely nothing and no prospect of anything, it may be better to stop spending money on it.
