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Debt Collection Disputes

Cash flow is the lifeblood of any business and speedy recovery action is vital to maintaining a good cash flow. Sajen legal represents creditors in all types of business and industry throughout Australia in debt recovery work. With proven terms of trade developed in conjunction with our commercial advisory team, we can improve your businesses cash flow in quick time. Make use of our well-earned reputation as experienced litigators to recover what’s due to you now!

Are you involved in a debt collection dispute?

A sad fact of life is that even successful businesses can have to recover debts.

There are several steps in the debt recovery process in Queensland:

Step 1: Establish whether the debt is legally enforceable

You first need to check whether the contract under which the money is owed is legally enforceable, and that the debts are not subject to the National Consumer Credit Protection Act 2009 (Cth) or the National Credit Code.

Step 2: Send a letter of demand

You then need to send a letter of demand to the other party, telling them of the dispute and how much money is outstanding, and giving them a defined period within which to settle the matter or else face legal action.

When sending a letter of demand, you must be careful not to:

  • Harass the debtor (they have the right to complain about this behaviour to particular government agencies and the police)
  • Send a letter designed to look like a court document, because this is illegal.

The Australian Securities and Investments and Commission (ASIC) has published a useful guide to acceptable and unacceptable debt collection practices.

Step 3: Response to your letter of demand

In response to a letter of demand, a debtor may:

  • Pay the full amount owing
  • Show that no money is owed
  • Negotiate a compromise
  • Ignore the letter or respond to it in a way that you find unsatisfactory.

Step 4: Consider your options

Depending on the response to your letter of demand, you have the following options:

Option 1: Write off the debt

You may decide to write off the debt because it is relatively small (for example, less than $2,000), and too difficult and expensive to pursue.

Option 2: Consider pursuing a small claims debt recovery action

If the claim is a small one, consider whether to pursue a small claims debt recovery action

In Queensland, you can pursue a ‘do it yourself’ legal action for debts up to and including $25,000, through the Queensland Civil and Administrative Tribunal (QCAT). It is important to note that in QCAT Proceedings, the parties must appear on their own behalf – that is, without representation. The only recoverable costs are filing and services fees. Legal-representation costs are not recoverable.

Option 3: If the claim is over the small claim limit, you will need to decide whether to pursue the claim in court

If the debt is over the limit provided for in the small claims division, you can still pursue action against the debtor.

In Queensland, debt recovery claims are dealt with as follows:

  • The Magistrates Court deals with debt recovery claims up to the value of $150,000.
  • The District Court deals with claims between $150,000 and $750,000.
  • The Supreme Court deals with claims over $750,000.

Debt recovery court action is a two-step process

It is important to understand that debt recovery is a two-step process.

Step 1: Settle or win your case

You must either negotiate a settlement after having commenced proceedings (which you can do at any time up until the hearing) or obtain a judgment from the court or tribunal.

Step 2: Take an enforcement action against the debtor

In order to recover the money owed to you, you may have to take an enforcement action against the debtor. This may include:

  • Obtaining a writ of execution against the debtor’s property
  • Securing a garnishee order against the debtor’s wages or bank account
  • Forcing the debtor into bankruptcy.

Why should you use Sajen legal’s litigation team to manage your debt collection dispute?

At Sajen Legal, our litigation team has extensive experience with debt recovery matters.

When it comes to debt collection, it is important to consider the following:

  • Is the debt legally enforceable?
  • Can the debtor pay? (For example, if the debtor has a number of creditors seeking payment of debts and is insolvent, it may not be worth pursuing legal action).
  • Is there a genuine dispute over the facts? (For example, if there is a genuine dispute over the facts and you lose the case and the other party has retained a solicitor to represent them, the other party may apply for a legal costs order against you).

At Sajen Legal, our litigation team can not only help you evaluate whether your debt is legally enforceable but help you consider your options in relation to recovering a debt. Finally, we can guide you through the claim process, so you have the best possible chance of succeeding.

Most importantly, if the debt you are seeking to recover is over $25,000 and the matter goes to either the Magistrates, District or Supreme Court, you can be sure that our litigators will use all our resources to achieve the best outcome for you or your company.

Finally, because we offer a fixed-fee service for litigation, you know exactly what costs you will incur from us running your matter.

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