Debt Collection for Businesses – by Ben McLean
Running a business can be hard enough without having to deal with debtors who owe you outstanding sums of money. Try as you may, sometimes it can be very difficult to recoup these debts yourself.
Engaging a lawyer to act on your behalf can allow you to turn your mind back to the running of your business.
Debt collection via legal action begins initially with a letter of demand which is often all that is required for the debtor to pay the amount owing to you. A letter of demand sent from a lawyer is generally more effective than one sent personally. Should the debtor fail to respond or pay the amount owing to you your lawyer would then seek your instructions to commence legal proceedings against the debtor personally or against their company depending on the situation.
Filing an initial complaint and statement of claim with the appropriate court depending on the amount claimed will allow you to identify what is owed to you, claim interest on the outstanding amount and claim for legal costs on scale. The complaint will then be served on the debtor, after which they will have 21 days to file a defence. Should they fail to file a defence your lawyer will make an application for a default judgment which is an order in your favour for the amount sought. This judgement will be registered against the debtors name personally, or if they are a company, against the company name. There are initial fees for filing and serving the complaint but these can also be claimed back form the debtor.
The registered judgment will remain on their credit report for 5 years and will likely affect any applications they make regarding finance. The judgement remains enforceable for 15 years.
If the debtor does not pay following the default judgement being entered against them enforcement proceedings will be commenced in which a Summons for Oral Examination is served, resulting in the debtor being summoned to attend court to answer a range of questions under oath. These questions enable your lawyer to ascertain which enforcement method will be most effective for you. Should the debtor fail to attend court to answer the summons a warrant may be issued for their arrest and they will be forced to attend court.
There are a number of different enforcement proceedings but some of the more common methods are: Attachment of Earnings Order, Attachment of Debt, Instalment Order and Warrant to Seize Property. There are filing fees for each of the enforcement methods but all fees can be claimed back from the debtor.
Should you require assistance with recovering money owed to you or your business please feel free to contact Ben McLean on 03 5226 4138 to discuss your matter.