Debt recovery -
Collecting on Old Debts

An old debt is where you have written the debt off, or you haven't collected it, because the debtor seems to have disappeared, or you just could not collect the money owing to you at that time.

Well, provided the debt arose within the last 6 years, if you don't have a court judgement, or 12 years if you do have a court judgement, debt recovery may still be possible on this debt.

However, if the Debtor is a company and has gone into liquidation, or if the Debtor is an individual, and has gone bankrupt, debt recovery is not possible.

Therefore, if either, bankruptcy or liquidation of a Debtor occurs, after the debt became payable, the debt is well and truly written off and you will never be able to recover it.

It is intended to consider the debt recovery options available to pursue an old debt. Keep in mind though, you still have to find the debtor, if you want to pursue the debt.

Sometimes, it is just better to sit and wait. Debtors, especially the ones who could be considered serial Debtors, have a tendency to disappear, and re-surface when they think the coast is clear, and creditors have given up.

Provided you are within statutory time limits, you can still pounce on a Debtor, when they least expect it, and collect your money. The time to chase the Debtor, is when they re-appear, and are least expecting it. You have to do your research, though.

Usually there will be 2 situations:

1. You managed to get a Court judgement before the Debtor disappeared, or, there was no debt recovery at that time, because the debtor did not have assets that could be seized.

2.The Debtor disappeared before you could even try to collect the debt, or you could not find the debtor to serve a Court claim on, and obtain a Court judgement.

Below is a discussion on your options in either of these different situations.

COURT JUDGEMENT DEBT

Provided the Debtor if an individual, has not gone bankrupt, or, if a company has not gone into liquidation, you can collect on that debt any time within 12 years of the date of the court judgement.

However, it is not normal to let a Company debt go on so long. Any Court judgement against a Company should be dealt with immediately. Companies rise, and fall, all the time.

If the Court judgement debt is over $1,000.00, interest on the judgement debt, at the prescribed Court rate continues to accrue until it is paid. This means that all of the interest is added to the original debt when you go to collect it.

If you have an old court judgement debt, click this link to see the interest rates to apply to the amount of the judgement debt, when deciding to pursue debt recovery of this money owing to you.

You can take all of the post court judgement actions available. If you would like to read more about the debt recovery options, with a Court judgement, click this link.

However, after 6 years, you cannot make an individual bankrupt.

NO COURT JUDGEMENT DEBT-

THE DISAPPEARING DEBTOR!

You do not have a judgement debt! You may have started court action, for debt recovery, or you may not have, but in either event, the Debtor could not be located, and the debt could not be collected. 

Or, you started a court claim, but, you could not find the Debtor to serve the claim and turn it into a court judgement debt.

Now, after all these years, the Debtor has re-surfaced, and you know where the Debtor is. This is the time to get a Court judgement against the debtor as soon as possible. The Debtor will usually be an individual, not a Company. Companies, because of the public reporting requirements, cannot just disappear, like an individual can.

Once you find the Debtor, there is little point in issuing demands for payment, on the chance the Debtor will decide to pay. If they were ever going to pay, it would have been at the time the debt arose. It, just isn't going to happen. You might strike it lucky, but, the greater risk, is that the Debtor disappears again before you can get a Court judgement. Demands will not achieve anything, and is a waste of time.

If you want a chance of collecting the money owed to you, provided, you have done your searches, to ensure the Debtor has not gone bankrupt in the meantime, and now has some assets to seize, you will have to start a Court action. You need a Court judgement to be able to take enforcement actions to collect the debt.

It is important to note, in most cases, provided, the court claim is started within 6 years of the date the debt arose, you are not barred from starting an action. However, if it is more than 6 years since the debt arose, unless, the debt arose by way of a deed, forget it.

Records

If you are to have any chance to obtain a Court judgement against the debtor after a number of years, it is important that you keep all records of the debt. Keep all of the documents including invoices, letters and anything else relevant to the debt.

You should make a full written statement, even if there is a written contract. This statement should be in the form of a statutory declaration, and made as soon as possible after the debt was due. If there are any other witnesses, get them to prepare a declaration as well. Then just put them away, to be pulled out later if you find the Debtor.

There is a good reason for doing this. If the debtor after you serve the claim on them, defends the claim, you will still have to prove your claim. If you do not have the basic evidence to support the claim, and the amount owing to you, you are unlikely to succeed. If you have found a missing Debtor, and want to know which Court to start proceedings, click this link.

Debt recovery of old debts is not impossible, but, it does requires the right planning, approach, knowledge and experience to maximize your prospects of collecting the money.

Let the professionals carry the burden.

Contact:

Phone 02-4333 1690    Fax 02-4333 5144

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