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Debt Recovery -
The Steps to Collect

debt recovery, debt collection, legal advice

Once you decide a debtor will not pay, it is time to consider the debt recovery options, you have available to collect the money owing to you.

Below is a discussion as to the steps that should be taken, to increase the chances of collecting the money owed to you. It will also provide an outline of the things you need to do to commence Court proceedings, if you want to pursue the debt. It also provides a brief outline of the steps in the court proceedings.

Debt Recovery - The Steps

You have sent the invoices and statements of account, and still there has been no payment. You have even rung up the Debtor, to get the same excuse, or, after a while, they just don't answer your calls anymore.

Don't worry, we have all been there!

Eventually, you will reach the view, that the person or company that owes you money, is just not going to pay.

The truth is, the Debtor is not going to pay you!

You need to take some other action to try and force them to pay. This is why you would engage a debt recovery agency.

So what does a professional debt collector do that is so different?

Well, once the Debtor is contacted by a debt collection agency, the Debtor finally realises that you are serious about collecting the money that is owed.

Surprisingly, a large number of Debtors respond to demands by a debt collector, and either pay up straight away, or make arrangements to pay the debt.

Once you engage a commercial debt recovery agent, they should take the following steps:

1. Send several letters of demand.

2. Make several phone calls to the Debtor in an attempt to get them to pay.

3. Report back to you within 2-3 weeks of you first sending the information about the Debtor.

You should be told that, either, the debt has been collected, or, the Debtor is not going to pay up on the demands alone. The Debtor may have disappeared, and, there are some Debtors, who will just not pay!

It is at this stage, you need to make a decision. You can write off the debt.

You may have decided to take no further action at this stage, but it doesn't mean that you can never collect on the debt. Click this link for information on how you can collect on those old debts.

Or, you can start court proceedings to get a judgement debt which will provide you with other legal means to collect the debt.

If you would like to learn more about the legal options you can use in debt recovery after getting a Court judgement, click here.

Court Proceedings - The Steps

You have decided that you want to collect the money owing to you. It is at this stage, unless you, are going to prepare and file the necessary Court documents for a claim, yourself, that you need to ensure you have given all the information to the debt recovery service. 

If you have invoices, written contracts, or anything in writing between you and the debtor, you should send it all.

If the agreement in regard to the debt with the Debtor, is not in writing, and is a handshake deal, or similar, you should give the debt recovery agent a written statement detailing how the agreement was reached, and how you have determined the amount of the debt.

All of this information is needed if the claim to be lodged in Court is going to be prepared properly. It is your money, and you should ensure the best possible chance of being successful.

HOWEVER - before Court proceedings are started, it is important that you find out, that if you obtain a Court judgement, that there are good chances of collecting the money. 

Searches should be made to see if the Debtor has assets, like owning their own home or similar. If they don't, you need to make a decision whether to continue.

Ultimately, the decision to continue is your decision, and will be based upon your own knowledge of the Debtor. Sometimes, you just have to make a judgement call.

The decision should not be made lightly, and you should weigh up the cost of continuing with the collection process, as against the amount of the debt. There is little point in spending money getting a Court Judgement, or spending money to try and collect the debt, if at the end of the day, you can't collect the money.

Once you are satisfied that the debtor is worth pursuing, because there is a good chance you will collect your money, you need to start Court proceedings.

Getting a Court Judgement

To get a Court judgement debt,the following steps are taken:

  • File statement of claim in the correct Court.

  • Serve the claim on the debtor. There are several ways of doing this.

  • After the claim is served, the debtor has 28 days to file a defence.

  • If no defence is filed, after 28 days, you then file a Notice of Motion for Default Judgement.

  • Once you have a default judgement, you can then consider the best way to try and collect your money.

What If a Defence Is Filed?

If a defence is filed, then the following steps take place:

  • It will be listed for a pre-hearing conference if the debt is under $10,000.00, or a call-over if it is over.
  • The pre-hearing conference is an attempt to settle it, if possible, if not, it is set down for a hearing.
  • The call-over is to see if it is ready for a hearing and what matters need to be done to get it ready. It can take several call-overs before it is listed for a hearing, but eventually it will be.
  • If the debt is under $10,000.00, in debt recovery, this is where the path followed by the Court separates from debts that are over $10,000.00.

If the debt is over $10,000.00, click to read about the Court procedures.

If the debt is under $10,000.00, click  to read about the Court procedures and the different path that is taken.

Debt Collection and Debt Recovery can be quite involved and complicated. You really should let the professional debt collection agent or solicitor advise you as to the best course of action, and look after it for you. It will cost you money, but in most cases, provided the debtor has assets, you should recover the additional costs you spend.


debt recovery, legal advice, debt collection

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