How to chase businesses that owe you money

Legally pursue your money from businesses through a debt recovery process

How to chase businesses that owe you money

There is no need to feel hopeless against businesses that owe you money; debt recovery can be taxing work when you are trying to do it all by yourself – that doesn’t need to be the case. Read below for the proper procedures and information you should know in advance before enlisting the help of a debt recovery lawyer. Debtors, which are the people or entities who owe you money, are also protected by debt recovery laws, so it’s important that you know the legal way of dealing and communicating with them.

Debt Recovery: Best Practices

The debt recovery process in Australia varies from each territory, however, the Australian Competition and Consumer Commission along with the Australian Securities Investments Commission has set out best-practice debt collection guidelines for collectors and creditors that include, but are not limited to the following:

  1. You are obligated to protect the privacy of debtors. It is critical to be careful when speaking about them in the workplace, through social media, or in phone calls.
  2. Never humiliate, abuse, offend, be obscene, or use discriminatory language against any debtor, their families, and other third-party members. Respect and courtesy should be always practised.
  3. If the debtor has particularly asked to only be contacted by a specific form of communication, you must respect this request. Simply, if you are not a lawyer don’t say you are.
  4. You are required to provide your details such as phone number, address, and email address when contacting debtors..
  5. You should not falsely misrepresent your identity in any way or alter any information about your organisation.
  6. There is reasonable frequency and timing of contact when dealing with debtors. Continuously contacting a debtor may be considered harassment.
  7. You should also consider the reasonable hours when contacting debtors and this depends on the circumstances and reasonable wishes.
  8. It is recommended that face-to-face meet-ups be the last option of contact.
  9. Personal visits may be justified if a debtor refuses or fails to respond to other means of communication
  10. A debtor has the right to have an authorised representative. You may be prohibited from contacting the debtor personally in this circumstance.
  11. You should ensure that you have detailed and accurate records of all communications with debtors.
  12. If liability is disputed, collection activity should be suspended. Continuing the activity without proper investigation brings a risk of breaching the law.
  13. Flexible and realistic repayment negotiations are encouraged and need to consider the debtor’s financial situation.
  14. When a settlement plan has been arranged, debtors or their representatives should not be contacted unless needed.
  15. Attend to complaints and disputes from debtors in a timely manner.

Refer to the Australian Competition & Consumer Commission’s Debt Collection Guideline: for collectors and creditors for the full list of guidelines.

The Debt Recovery Process

The process may vary depending on the debt collection agency you work with, but it usually looks like:

  1. Notifying the debtor using a structured approach through different means of communication such as letters, emails, or phone calls.
  2. Evaluating the financial situation of the debtor and creating the best strategy that will suit their circumstances.
  3. Consider issuing a complaint to resolve the dispute directly with the other party before proceeding in the courts or tribunals.
  4. A letter of demand can be issued as a final demand for payment. Well prepared letters of demand can assist in the recovery of outstanding money and in certain instances avoid the commencement of court proceedings.
  5. Assessing the right repayment plan.

Debt Collection Frequently Asked Questions

Limit on debt recovery claims. In Australia, the statute of limitation for a simple contract debt is six years. The only exception is the Northern Territory where the statute of limitation is three years. The statute of limitations is not a time limit for collecting the debts, it is instead a deadline for filing claims with the court.

Timelines on Debt Recovery. Regarding how soon you can engage in debt collection activities, multiple circumstances that will determine how long it will take, such as:

  • The debtor’s cash flow and financial position;
  • The debtor’s willingness to pay their debts;
  • The complexity of the debt dispute;
  • The quality of your credit documentation; and
  • Any existence of Personal Guarantees.

Minor Debt Disputes. The Queensland Civil and Administrative Tribunal (QCAT) can determine minor debt disputes, valued up to and including $25,000. Examples of the types of debt disputes within QCAT’s jurisdiction include:

  • Money lent and not repaid;
  • Dishonoured cheques;
  • Unpaid invoices or accounts; and
  • Work done and / or goods supplied.

Utilising a debt recovery process will reduce the time it takes to recover the debt and reduce the chance of a severe debt arising.

At Forge Legal, we can help you create a debt recovery strategy, prepare letters of demand, provide advice and representation, and assist in making debt recovery claims. Our trustworthy team of legal practitioners are your best choice for a smooth debt recovery process.

Collect debts with confidence, call us at 1300 0 FORGE for a debt appraisal or legal advice.

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