Running a business can be hard enough without having to deal with debtors who owe you money. Try as you can, sometimes it can be very difficult to collect these debts on your own.
Hiring a lawyer to act on your behalf can allow you to focus on running your business, rather than using your valuable time chasing debtors.
The collection of debts by legal means begins with a formal notice. In our experience, this is often all the debtor needs to pay the amount owed to you.
A demand letter sent by a lawyer is generally more effective than a letter sent personally.
If the debtor does not respond or does not pay you the amount owed to you, then your lawyer will seek your instructions to bring legal action against the debtor personally or against his company, as the case may be.
Legal proceedings are initiated by the filing of an initial declaration with the competent court.
The competent court to file the declaration depends on the amount claimed.
Filing a claim will allow you to identify what is owed to you, claim interest on the unpaid amount and claim court costs according to the scale.
The Magistrates Court of Victoria has a jurisdictional limit of $100,000 and most debt cases below this amount can be heard here.
After you file your statement, it will be served on the debtor, after which they will have 21 days to file a defence.
If he fails to file a defence, your attorney will apply for a default judgment, which is an order in your favor for the amount claimed.
This judgment will be registered in the name of the debtor personally, or if it is a company, in the name of the company.
There are initial costs for filing and serving the complaint, but these can also be claimed from the debtor.
The recorded judgment will remain on the debtor’s credit report for 15 years and will likely affect any financing requests they make.
If the debtor fails to pay the amount due as a result of the default judgment rendered against him, enforcement proceedings will be initiated in which a summons to appear is usually served.
As a result, the debtor is summoned to appear in court to answer under oath a series of questions concerning his financial situation.
The answers to these questions are then communicated to your lawyer, which will allow him to determine which method of execution will be the most effective in getting you to repay the debt.
There are a number of different enforcement methods available to the court, but some of the most common methods are: Earnings Seizure Order, Debt Seizure, Payment Order and a Warrant of Seizure Goods.
There are processing fees for each of these methods of execution, but these fees can also be claimed from the debtor in addition to the debt due.
If the debtor fails to appear in court for the subpoena, a warrant for his arrest may be issued against him and he will be compelled to appear in court to conduct the oral examination.
If you need help recovering money owed to you or your business, please contact Ben McLean on 5221 8777.