Debt collection lawyers are lawyers who practice in the collection of debts and enforcement of money orders.
Have you continually chased after a customer and they still haven’t paid you?
Sometimes a customer needs some extra ‘encouragement’ to pay.
Or perhaps they are insolvent and do not have the funds to repay debts as they fall due.
Either way, a debt collection lawyer can help you get your money back.
Before Instructing Debt Collection Lawyers
There are some simple steps you should take before engaging a lawyer.
- Friendly payment reminder
When payment becomes overdue, send your customer a friendly reminder of the outstanding debt.
This may be in the form of a phone call, email or a letter. Don’t forget to include banking details and payment options in the reminder.
- Overdue payment reminder
If the client still owes money, send them an overdue payment reminder to remind them that they owe money and request its prompt repayment.
Again, your banking details should be displayed prominently to allow for easy repayment.
- Formal letter of demand.
If your client still has not repaid the debt, then it is time to send a formal letter of demand.
The letter of demand must clearly stipulate the amount of money that is owed, who is liable for the debt, how the debt was incurred, how the debt can be repaid, the date by which it should be repaid and the consequences of a failure to comply promptly with the letter of demand.
A formal letter of demand can be written by you.
Alternatively, it can be written by a debt solicitor on the solicitor’s letterhead – oftentimes a letter from a solicitor is all it takes.
If the indebted person or company does not respond favourably to the letter of demand, then it may be time to consider initiating legal proceedings to recover the debt.
How Can Debt Collection Lawyers Help Me?
The decision to commence legal proceedings is a big one, and you must take into account the size of the debt, the approximate costs of legal fees, and the risk that the Court will award costs against you if you are unsuccessful.
First of all, there is a six-year limitation period from the date of the debtor’s default in which you must initiate legal proceedings.
If the debt was incurred less than 6 years ago, then your lawyer can commence legal proceedings by filing a Claim and Statement of Claim with the Court.
The debtor has 28 days to respond to these documents by filing and serving a defence.
If the debtor does not repay the debt, or file a defence, enter into a payment arrangement or otherwise respond to the documents, then your debt collection lawyers can apply for a default judgement to be granted in your favour.
This allows you to apply for an enforcement warrant to enforce the judgement. With this warrant, an enforcement officer can divert the debtor’s earnings to the creditor (within limits), seize and sell real and personal property or divert any debts that are owed to the debtor to the creditor.
Can I Recover a Debt From an Insolvent Company?
If it is an insolvent company that owes you money, your lawyer may issue a formal ‘statutory demand’.
This may be an alternative to commencing the aforementioned legal proceedings, or it may occur after those proceedings have been exhausted. The object of a statutory demand is to wind up the company.
A statutory demand can be issued on a company if it owes debts greater than $2,000 (outside COVID-19 amendments) and the debt is due and payable. It must be accompanied by an affidavit or a Court judgement.
The company then has several options: repay the debt, respond to the statutory demand or apply to the Court for the statutory demand to be set aside.
If the debtor does not respond to the statutory demand within 21 days, then the company is presumed to be insolvent.
Interestingly, you do not have to be the person to serve the statutory demand on the debtor company to take advantage of the debtor company’s presumed insolvency (ie. if another creditor of the company that is indebted to you serves the statutory demand, you can benefit from the indebted company’s presumed insolvency).
It is for the debtor company to prove that they are not insolvent. If the debtor company does not apply to set aside the demand, Court proceedings will commence to wind up the company.
Can I Recover a Debt From an Insolvent Person?
If it is an insolvent person that owes you money, your lawyer may issue a formal ‘bankruptcy notice’.
A bankruptcy notice can be issued on a judgment debt over $5,000 which is less than 6 years old.
Once a bankruptcy notice is served, the judgment debtor has 21 days to pay the debt, or apply to set the bankruptcy notice aside.
If they do neither of these things, then the judgment debtor will have committed an act of bankruptcy.
It is this act of bankruptcy which allows the judgment creditor to present a creditor’s petition in the Federal Circuit Court.
If the sequestration order is made, a trustee is appointed to the debtor’s estate in an attempt to create a fund to pay creditors.
Sunshine Coast Debt Collection Lawyers
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