Debt recovery has been a big issue over the years and in the recent years the problem have increased.
Thus, to exercise a control over this problem and in an attempt to reduce the widespread practice of late debt repayment, the Government of Scotland has passed the Late Repayment of commercial Debts (Interest) Act 1998 which attempts to exercise a control over the debt repayment. Debt Recovery in Scotland has always been a major problem and thus, the legal enactment had to be passed. The late debt repayment also has a very tremendous effect in the economy. It leads to considerable liquidity difficulties in various businesses which is very troublesome at times.
The Repayment of commercial Debts Act 1998 is a very useful and effective tool to recover a very large debt from the debtor and the client can do it very legally by sending a legal notice or by filing a legal case against the debtor. According to this Act, an interest is levied on the debt amount from an early date which the debtor is liable to pay to the creditor. This rule has made the law more attractive for the creditors. After the introduction of this law in Scotland,
Debt recovery Scotland has become much easier and people think several times before taking a debt of large amount for a very long period.
According to this Repayment of Commercial Debts Act 1998, the creditor organization can claim the late payer an interest of 8% above the base rate 30 days after the debt was due. In many business dealings between two organizations, a credit period has been agreed. There is no interest to be paid by the debtor to the creditor during this aforesaid period. The interest is levied on the debt amount once the payment does not come after the agreed period. The interest to be levied on the debtor party is calculated as simple interest. The base rates are fixed for a six month period. The applicable rate of interest applies to the debt and does not vary with time. All interests calculated are simple interests and under no conditions the interest can be compounded. Thus, interest is always calculated on the debt amount only.
The Government of Scotland has introduced the Repayment of Commercial Debts Act 1998 to avoid bad debts and to make the debt recovery a more convenient and easy process by giving a legal foundation to it. Before the introduction of this Act, Business entities and organizations used to loose a lot of money as bad debts which led to huge loses and sometimes led to bankruptcy of the organization. It also affect the liquidity flow in business tremendously. Now with this Act enacted, all thee problems have come to an end.
