How to Recover Debt From an Individual or Company
Making payment or delivering goods and services, and not receiving the balance in return, can be an incredibly frustrating situation that has wide-reaching impacts on a person’s life. In a delicately poised debtor-creditor stand-off, every interaction matters. Not all approaches to debt recovery are equal.
Although you are owed the money, and may have a legal right to this money, the way you go about collecting your debt can still be illegal. For example, the Australian Competition and Consumer Commission (ACCC) specifies that it is illegal, when contacting a debtor, to use physical force, coercion or exploitation, harassment, deception, or to act ‘unconscionably’.
How to avoid debt in the first place
There are certain best practices that can help to reduce the likelihood of bad debts ever occurring. It may be valuable to:
Conduct background checks where possible
Avoid dealing with businesses that are in administration or liquidation
Assess credit ratings and reputation before transacting
Do not deliver goods or services prior to payment
Provide invoices in a timely manner and ensure that payment is straightforward
Incentivise early payment
Perhaps the most important step is to ensure that the contract and/or terms and conditions are sound and that, in the instance of non-payment, they will provide protection if a debt is not paid.
It can also help if the contract is crystal clear about when payment is required, and what will happen if no payment is received.
Once you have transacted, you may wish to set up regular reminders that payment is due and keep records of your correspondence.
All of this said, there is always an element of risk in every transaction. Online transactions highlight this; they do not allow for goods and payment to be transacted at the same time.
Sometimes you can do everything by the book and still end up transacting with someone who doesn’t end up paying you. They may have had intent to pay, or they may have never had intent. Either way, you’re not receiving your money.
What to do if an individual or company still won’t pay?
It can get to a point where, standing alone, you feel powerless to recover your debts. At this point, a person needs to assess what they can do next. They need to consider the importance of the money they are owed, potential legal costs, and whether this matters to them as a matter of principle as well.
A legal services team with experience in contract law, debt recovery, and consumer law will be able to provide a range of legal services to support you in recovering your debt. This may include advice that is unique to your circumstances. It may also involve representation in court.
However, it does not always need to get to this point. Often but not always, debts can be recovered through a letter of demand. This is a special lawyer-prepared letter that is sent to the debtor, frequently addressed to the director of the company in question. If well-formulated, this often provides sufficient compulsion to a debtor to pay.
It also opens to door to further options if the debtor does not pay, and may be followed by court proceedings seeking a judgment against the debtor. Even if court does not resolve the payment, experienced lawyers often have additional recourse – to options such as a Writ for the Levy of Property and garnishee orders.
To take the first step towards recovering your money, contact Arida Lawyers on 1300 146 390 or info@aridalawyers.com.
This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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