Do you have customers that owe you money?
WHAT OPTIONS ARE THERE TO CHASE DEBTS?
Where a customer has not complied with the terms on which goods or services have been provided, in that they have failed to make payment as and when required and despite repeated requests, it can often be of assistance for a demand letter to be sent by a lawyer.
The letter of demand will usually require payment in full by a defined time or may propose a payment plan with payment by instalments.
McKillop Legal is often called upon to advise in relation to debt recovery issues. We find that a strongly worded demand, clearly setting out the situation and seeking payment within a reasonable period usually results in payment.
There are various options available for business owners to recover moneys due.
If a letter of demand does not result in payment, there are various options available.
Where the debt is due by a company and the debt is more than $2,000 and it has not been disputed, a Creditor’s Statutory Demand can be issued under the Corporations Act giving the company 21 days to either pay the debt or to come to an arrangement to you for payment of the debt, failing which the company is presumed at law to be insolvent and can be wound up on application to the Supreme Court.
If an individual or partnership owes the debt, a company owes the debt and it is less than $2,000 or if a company debtor disputes the debt, then usually the commencement of proceedings will be necessary (and you would need to weigh up the costs and benefits of doing so to make a commercially sensible decision).
If the debt is over $5,000 and the debt is the subject of a judgment of a court, you can issue a Bankruptcy Notice. A Bankruptcy Notice provides for payment of the debt or a satisfactory arrangement for payment of the debt to be made within 21 days, failing which an “act of bankruptcy” has been committed, entitling you to commence proceedings in for a bankruptcy/sequestration order.
Options for enforcement of judgments also include:
- Garnishee orders
- Writ of Execution over property – where the Sheriff sells personal property, land etc
- Instalment orders
For further information in relation to business succession, estate planning, litigation and dispute resolution or any commercial law matter, contact us on (02) 9521 2455 or email firstname.lastname@example.org