Debt Recovery Process

A creditor can recover debt in a number of ways, including a formal default notice, a letter of demand or commencing court proceedings.

This article will discuss the processes involved in recovering that debt in the most efficient and effective manner possible.

Preliminaries

A contract debt becomes actionable the first day that it becomes overdue. If payment is not made, the time limit to file a court summons is generally six years from the first day the debt is overdue. If the debtor has signed a legal agreement to pay the debt or acknowledgement of it, this may extend the time. If the debt you seek to recover originates from a period of time greater than six years, sometimes that timeframe can be extended by the Court. We recommend legal advice is sought if this is the case.

In any event, if you seek to pursue debt recovery action you should have proof that the debt exists and of the debt’s value. Copies of invoices, agreements, emails, or other documents proving the debt exists should be collated and stored in advance of your consultation with a solicitor.

Letter of Demand

The first step in seeking recovery of your debt is to issue a Letter of Demand (also known as a “Final Notice”) to the debtor.

This letter will specify the funds owed for the services rendered by creditor, circumstances leading to this letter being issued to the debtor (eg. multiple failed attempts to recover the debt owed) and consequences if payment is not made by the debtor by a stipulated date.

Sending a Letter of Demand is an important step in the litigation process at it provides the debtor the opportunity to settle the debt prior to lengthy and expensive Court action. The letter can later serve as evidence that the debtor did not reasonably comply with the opportunity to settle the debt.

Filing a Claim in Court

If your debtor does not comply with the demand, then the next step is to file a claim in Court.

In order to do so, you should seek the assistance of a solicitor to draft the necessary Court documents to initiate the Claim. The Claim is the document which puts forward your reasons as to why a debt is owed to you by the debtor.

If you would like to know more about debt recovery, simply email us at info@straitslawyers.com or call at 08 8410 9069 to arrange an appointment.

Alternatively, you can book an online consultation with us via this link: https://straits-lawyers.square.site/product/online-consultation-/11?cs=true

Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.