How do I calculate interest to charge a debtor?

[Backdrifter]

I'm the Chair of our residents association in a block of 6 flats. One resident has not paid the quarterly maintenance fees since October 2008. We've been in regular communication with him, requesting updates, offering earlier this year to accept small payments to help offset the debt, to which he did not respond. He told us some time ago he is out of work, then recently told us he 'lost his job in April' which suggests he has been employed during the debt period. A solicitor suggested we request a 12-month payment plan and that we should charge interest on the debt, which has now accrued to £2000. He has no mortgage, runs a car, is clearly using electricity and eating, so has funds from somewhere. He keeps promising us his dad will pay it off for him but he's been saying that for nearly a year now. I checked the Businesslink website and there is a statutory interest calculator but it came up with £412 which seems high. Any advice?

[maclarencat]

If the contract does not state plus interest I doubt you can charge it. You could persue him through the court for the money. You can do this on line at www.moneyclaim.gov.uk If you do this you can claim interest even if the original contract doesnt include interest. As for calculating the interest it starts to accrue from the date of the debt but as its ongoing you do not charge interest on £2000 from day 1 but needs to be done on a sliding scale. Even if he claims he has no money he obviousley has assets and this would be taken into account if he failed to pay. However I dare say if a summons was issued for the money he would rapidly find what he owed.

[Twenty20]

Interest rate would be 8.5% (8% above base rate of 0.5%).

I assume the Businesslink website has the same calculator as here.....

http://www.payontime....ulator/index_new.html