To protect your cash flow you need to ensure that your business or Owners Corporation can collect bad debt. This is a common area of business activity and there is a well established legal process for debt collection for businesses and Owners Corporations.
The Process of of Bad Debt Recovery
- Letter of demand is sent to the debtor. This debt collection letter needs to be legally admissible and so must include include: specific details of the debt, a request that payment be made by a certain date; and a warning that debt recovery options will be pursued if payment is not received by this date.
- Suing for debt. In the instance of a business debt, Court proceedings commence with the filing of a Statement of Claim. The Court handling the matter depends on the amount of the debt and the forms required vary so it’s important to seek legal advice at this stage. In the instance of an Owners Corporation debt, VCAT proceedings commencing with the filing of an Application, Points of Claim and Affidavit usually sworn by a Manager of an Owners Corporation.
- The way that the debtor responds to the Statement of Claim/Points of Claim determines the next steps. They may agree to an instalment order, they may not respond at all in which case a Court/Tribunal Judgment will be obtained or they may file a Defence.
- Where an Order has been made against a debtor in the Tribunal and payment of the debt remains outstanding that Order must then be registered in the Magistrates Court of Victoria before any enforcement steps can be taken.
Enforcement of Court Judgment or Tribunal Order
The Court has a range of options available to proceed with collection of your money. These include:
- Seizing property, where the debtors goods are seized and sold at auction
- Selling Real Estate
- Summons, where the debtor has to attend a public Court examination to explain their assets and liabilities
- Garnishee Order, where a percentage of their wages are given to you
- Bankruptcy/winding up proceedings
How we can help
We have experienced lawyers who are completely at home with the legal processes involved in Victorian debt recovery services. We can help you at any stage of this process of recovering a business debt, whether it is helping you write an effective and legally sound letter of demand, or pursuing the matter through the Court system. Our debt lawyers are familiar with the process of enforcing Judgment and can manage the process right through to bankruptcy or company winding up proceedings if need be.
We are also well aware of the costs of debt litigation and can advise you on whether it is commercially viable to proceed to Court or the Tribunal.
Contact us to discuss the specific details of your business or owners corporation debt.