09 Jul 2020
09 Jul 2020
Chances are if you’re considering engaging a lawyer for debt recovery you have tried pretty hard to recover your money yourself. You may be frustrated and maybe disappointed with the debtor. You may even be sympathetic to the debtor’s plight and wanting to keep the commercial relationship.
We understand the balance between recovering your money and your continuing commercial relationship.
By engaging an experienced debt recovery lawyer you are engaging help from a third party who is focused and determined on obtaining results for you. Many debt recovery agencies (as opposed to debt recovery lawyers), especially those on commission, don’t take a thorough enough approach. They have to churn files out fast. Valuable time gets lost in being too soft on the debtor instead of getting the debtor’s mind focused on paying your money. All the while, chances are that someone else will be trying harder to get their money will actually get paid first.
By contrast, an organised and specifically tailored approach from an experienced law firm will focus the debtor’s mind much faster. Engaging a lawyer will ensure that the debtor will be clear about your intention to recover the monies owing.
What you must be looking to do is get to the top of the pile. Specific legal methods when combined together can have a surprisingly effective way of influencing circumstances in your favour as the creditor.
Sometimes debtors can be quite crafty or you may wish to use a third party to maintain the commercial relationship. Debtors can be genuine, but just not have the funds available just now. Others may have the money but be paying someone else in preference to you. Either way, the approach you need to take is a no-nonsense one. The lawyer in your corner should be seeks to understand the type of person you are dealing with and cut through the excuses and get to the facts.
This is not a one size fits all approach as there can a variety of outcomes that will suit everyone. There are different strategies that can be used for different types of debts and debtors. Lawyers experienced in debt recovery will be able to use their skills in negotiation and legal strategy to get the best outcome for you.
Working with the debtor your lawyer will work to ensure that the debt is paid is that your interests are protected along the way to recover the full amount owing. Having legal representation can change the tone of the conversation to your favour quickly with a debtor as they may wish not to incur further costs and know that you are serious about pursuing the debt.
Selecting the right approach requires skill and as noted above, consideration of the debtor. The size of the debt can be relevant in how far you take the process, but good results can be yielded from a single letter from a lawyer.
If the matter becomes litigious you need to ensure that the correct court procedures are followed. Commencing legal proceedings in a court rather than VCAT is generally better as courts allow for legal costs as a matter of right. This is important if the matter is defended.
Some debtors merely require a push from the lawyer and settlement terms can be reached and documented correctly.
Other debtors will be more stubborn and an experienced debt recovery lawyer will explain different options and strategies that apply to your circumstances. If they need time, there are ways that a lawyer should be able to negotiate that secures your position. This might include a caveat or guarantee from a director.
Ultimately, it’s about getting paid and getting paid faster. Your lawyer should be looking to get your full amount back plus your legal costs where possible.
Having the right approach and representation will accelerate the results. If you have been unsuccessfully trying to recuperate funds you should consider engaging a lawyer to start the process for you. In some instances you can continue to negotiate the debt using the legal process as a lever.
Sometimes you have to go ahead with court proceedings to pursue your debt. It is important that your lawyer chooses the appropriate court or tribunal to fast track the process and as there are set limits to where certain cases can be heard and outcomes.
Legal proceedings are a great motivator to resolve the issue before a judgement is entered into against the debtor damaging their credit rating. Legal proceedings can be cost effective depending on the size of the debt and some of those costs can be added to the debt.
Statutory Demands are also a useful tool in recovery of debts. They can be issued if the debtor is a company and the amount owing exceeds $2,000. This is a very effective approach to quickly get paid or prove insolvency.
Statutory demands do have to satisfy the criteria to be effective and not able to be set aside by the debtor if defended. It is crucial to have an experienced lawyer handling the process. This is where adopting the right strategy is key.
Either approach should force the debtor into a conversation about the payment of the debt.
Once the parties are talking it is easier to resolve the issue. In debt recovery as with other areas of law there are always multiple approaches that can be taken to get to the same result. An experienced practitioner will be able to develop with you the best strategy and approach to get the desired result.
If you need assistance to recover outstanding debts there are many ways that we can assist in helping you recover debts from your clients. Contact one of our debt collection lawyers today to discuss further on 1300 907 335 or complete an online enquiry form.