What to do when someone stops paying

The short version

Work through these in order. Most disputes should stop well before the last step.

1. Speak to them privately.
2. Work out exactly what they owe, and who they owe it to.
3. Gather your records.
4. Send a letter of demand with a deadline.
5. Make a court claim if it’s worth it.

The court steps below apply to England and Wales. Scotland and Northern Ireland have different processes.

1. Speak to them privately

Ask what has happened before you tell the group. People miss payments after losing a job or falling ill, and a plan to catch up can save the circle. Agree the amount and the dates, then confirm them in a message so you both have a copy.

2. Work out what they owe

Count the rounds they missed, and be clear about who lost out. In most circles, the person owed is the member who should have received that payment, so that member may be the one who has to claim.

If several people are owed, each of them needs to decide what to do. A banker who has paid other members out of their own pocket may be owed that money themselves.

3. Gather your records

Keep copies of anything that shows what was agreed and what was paid:

• The rules and the order of turns, including messages where people agreed to them.
• Bank statements showing what they paid and what they received.
• Your messages with them about the missed payments.

4. Send a letter of demand

The court expects you to try to settle before you claim. Under the Practice Direction on Pre-Action Conduct, you should write with short details of the claim, covering the basis for it, a summary of the facts, what you want from them and how you worked out the amount. It says the other person should reply within a reasonable time, which is 14 days in a straightforward case.

The same rules call court a last resort and ask both sides to consider negotiating or mediation. The court can penalise someone who refuses to take part without good reason.

5. Decide whether a court claim is worth it

You can claim online or by post. You pay a fee based on the amount you’re claiming, including interest:

These are the fees GOV.UK listed when we updated this guide. You may be able to get help with fees, and you can usually claim the fee back if you win. There can be further fees for a hearing or for enforcing a judgment. You can usually add interest at 8% a year, which is about 22p a day on £1,000.

You can’t claim online if you’re claiming on behalf of more than one person, against three or more people, or against someone without an address in England or Wales.

What happens after you claim

1. The other person has to respond to the claim.
2. If they don’t respond, or they refuse to pay, you can ask the court for a judgment.
3. If they dispute a claim of £10,000 or less, you both have to attend free mediation. It’s by phone, lasts up to an hour, and the mediator speaks to each of you separately.
4. If mediation doesn’t settle it, there may be a hearing.

A judgment doesn’t put money in your account. If they still don’t pay, you’d need to ask the court to enforce it, and that costs more. Think about whether they can pay before you spend money claiming.

Don’t leave it too long

Under section 5 of the Limitation Act 1980, a claim on a simple contract in England and Wales can’t be brought more than six years after the cause of action arose. Written proof of what you agreed will make any claim easier.

What to avoid

• Don’t post about them in a public place. What you say about them could cause a legal problem of its own.
• Don’t threaten them, turn up at their home or contact their employer.
• Don’t keep their share of the next pot without the group’s agreement.

Where to get free advice

Citizens Advice and Advicenow can both help with small claims, and GOV.UK points to them. If the person you’re claiming from is in Breathing Space, a debt respite scheme, you won’t be able to claim during that time.

This guide is general information and isn’t legal or financial advice.

Where CircleSave fits

If your circle runs on CircleSave, a member who is owed money can prepare a letter of demand and download the circle’s payment record from their dashboard. The organiser can prepare one on their behalf. You decide whether to send it, and you send it yourself. CircleSave doesn’t collect debts, contact the other member or give legal advice, and we can’t promise you’ll get the money back.