Someone owes you money. Perhaps a lot of money. You’ve done all that you can reasonably do, including make all those phone calls, send out those notices and write all those letters. You might have even attempted some form of arbitration not involving lawyers but none of it has resulted in the recovery your debts. You may have also read our previous blog that discusses the right time to engage a debt recovery lawyer.
So now that you’re considering legal steps it’s useful to know what lawyers can do to get you some resolution, closure and compensation.
The primary reason for commencing legal proceedings is to get a court judgment. This is a binding order from a court to perform an action. There are serious repercussions upon debtors for failing to comply with a court order, but in many cases you will need to enforce the judgment against the debtor.
Here are just a few of the ways a debt recovery lawyer’s involvement can help you achieve a positive outcome. In order of escalation, these options could be:
1. A formal letter of demand, stating specifically the grounds for payment, the amount, a due date (usually 14 days from delivery) and expressing an intention to commence court proceedings if the debt is not paid.
2. A Statement of Claim. This is a document filed with the Court and served on the Defendant. In basic terms it says, “pay within 28 days or file a defence.” If the debtor doesn’t file a defence you can apply for default judgment.
3. Default Judgment. This means that judgment is entered against the Defendant by default for not complying with the Statement of Claim. Credit agencies get notified of the judgment and their ability to obtain finance approvals becomes severely limited. This is extremely inconvenient for many people, but even here, debts can remain unpaid. At this point, you might have to enforce judgment.
4. Even if the debt gets partially paid, you can still file for enforcement of the balance.
5. At this point “balance” can include any expenses, past, present and future, incurred in the debt recovery and these amounts usually depend on the size of the claim and the work completed to date.
6. Examination Notice. This is an order for the debtor to voluntarily disclose their finances to the Court. If the debtor fails to reply you can apply for a court order forcing the debtor to attend Court to disclose finances. If the debtor fails to do that, they can be arrested for the purposes of disclosing their financials.
7. Once both you and the Court know the debtor’s financials, you can proceed with various options. One option is a Garnishee Order for Debts. One type of order compels the bank to forward money directly from the debtors account to yours.
8. If this isn’t an option, (because there’s not enough money in the account), then you can apply for an order to Garnishee Wages. This forces the debtor’s employer to directly pay an ordered amount to you in instalments until the debt is paid.
9. If this isn’t an option, and the debtor has assets, the next step is to apply to the court for a Writ of Levy or Property. This authorises a sheriff to seize debtors goods for sale at auction. Proceeds from these sales are “attributed” to the debt and associated expenses such as interest and legal or other fees.
10. If the debtor is a “natural person” (a real person, not a company) and the debt is over $5000, you can issue a Creditor’s Petition for a sequestration order. If the orders are made, the debtor can be made bankrupt and their assets seized and administered.
11. If the debtor is a company and the amount is over $2000, you, as the creditor, can apply for a Statutory Demand requiring payment in full in 21 days. If this fails then the court presumes that the company is trading insolvent, and this can lead to administration and a winding-up application in the Supreme Court.
The good news is that you are NOT powerless in this situation. There’s a lot that you can do and a specialist debt recovery lawyer can advise and guide you through the process. Better still, the legal fees and other expenses will be included in the debt and are sometimes recoverable from the debtor.
The important point here is that YOU are in charge and YOU determine what you are willing to do and how far you are willing to go. Knowing all your options is the important part, so now you can make an informed decision on your next steps.