Debt Recovery

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​If you’re struggling with debt recovery, let’s take the first step together. Schedule a free 15-minute consultation with debt recovery lawyers today, and let’s explore how we can assist you in this process.

Executive Summary

At Odyssey Legal, we understand that unpaid debts can significantly impact your business’s (or your personal) financial health. Debt recovery is the process of pursuing payments of debts owed by individuals or businesses.

Our experienced debt recovery lawyers are versed in navigating the complexities of debt recovery. Our goal is to help you recover your debts efficiently and effectively, minimising the impact on your financial health. Unfortunately, the reality is that often proceedings are required to recover the debt, due to the refusal of the debtor to make payments when due and payable.

Our experienced debt recovery lawyers can assist with:

1. Drafting and serving letters of demand or responding to letters of demand;
2. Negotiating payment plans or settlement agreements;
3. Starting proceedings in the Court with jurisdiction;
4. Filing and serving a claim and statement of claim;
5. Obtaining a judgment;
6. Enforcing the judgment through the Court processes;
7. Enforcing the judgment with a statutory demand against a company and commence a winding up application in the Federal Court; and
8. Enforcing the judgment with a bankruptcy notice against an individual and commence bankruptcy proceedings in the Federal Court.
9. Coaching businesses to implement effective debt management processes and reviewing their contracts to strengthen their ability to recover the debts.

Within this article, our debt recovery lawyers will explain the above avenues available to be utilised to recover a debt.

Letters of Demand

If informal discussions or communications between the parties have not resulted in the debt being repaid, then generally the first step is to issue a letter of demand. A letter of demand is essentially a notice to the debtor, outlining the particulars of the debt, requesting payment of the debt or specifies the action required to rectify an issue (i.e. rectify defective work) and identifying the consequences of non-compliance. To this effect, the letter also serves as a final notice to the debtor, to try resolve the dispute, prior to the commencement of legal proceedings.

Unfortunately, a letter of demand is still simply a letter and there is no requirement for the debtor to acknowledge, respond or comply with the letter.

A letter of demand can be issued by you (templates are available for purchase in our Shop), or alternatively, our expert debt recovery lawyers can assist in drafting and issue a substantive letter of demand to the debtor or responding to a letter of demand.

Negotiations

If initial contact has shown signs that the debtor is willing to negotiate and discharge the debt without the need for legal proceedings, then our expert debt recovery lawyers can assist in progressing negotiations, advising you on any proposed settlement terms or payment plans and draft Deeds of Settlement (templates are available for purchase in our Shop), formalising the agreement between the parties. Another purpose of a Deed of Settlement is to ensure that the debtor has no defence to any legal proceedings that may be required, if they breach the Deed and do not repay the debt.

Legal Proceedings

If all previous steps to recover the debt have been unsuccessful, then it may be necessary to commence proceedings against the debtor.

Our expert debt recovery lawyers can assist in drafting, filing and service a claim and statement of claim against the debtor to commence proceedings in the Court with jurisdiction, namely:

1. Magistrate Court has a monetary jurisdiction of under $150,000.00.
2. District Court has a monetary jurisdiction of $150,000.00 - $750,000.00.
3. Supreme Court has a monetary jurisdiction of more than $750,000.00 and above.
4. Federal Court has jurisdiction to deal with all almost all civil matters arising under Australian Federal Law, including but not limited to, bankruptcy proceedings or winding up applications.

Alternatively, if legal proceedings have been commenced against you, then our expert debt recovery lawyers can assist in drafting a defence, to contest the proceedings.

Obtaining a Judgment

Once proceedings have been commenced, there are various avenues available to a plaintiff (party commencing proceedings) to obtain a judgment. This includes (without limitation):

Default Judgment: If the defendant (party defending proceedings) fails to file their defence within twenty-eight (28) days after being served with the claim and statement of claim, then the plaintiff is entitled to request that the Court make a judgment in their favour due to the defendant’s default. Whilst this is the most efficient and cost-effective avenue to obtain a judgment against the defendant, it only arises if the defendant does not file a defence. If they do, then a default judgment is not available. Further, pursuant to rule 290 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) a default judgment (once obtained) can be set aside, if the defendant is able to satisfy the Court that they have goods grounds to do so. There are various factors that will allow the default judgment to be set aside which we will discuss in a separate article.

Summary Judgment: If the defendant does file a defence but it is insufficient or does not disclose any sufficient defence to the proceedings, then you may be able to apply for a summary judgment. The Courts have held that a summary judgment will only be granted in the clearest cases, where there is no discernible defence.

NOTE: If a Deed of Settlement (referred to above) is executed by the parties, we will generally include a clause within the Deed, allowing you to obtain a default or summary judgment if the debtor breaches the Deed to allow this process to progress efficiently at a minimum expense.

Trial: If you progress the proceedings all the way to Trial and you are successful, then you will obtain a judgment in your favour. Unfortunately, this is the most costly and risky avenue, as the final decision is made by the Magistrate or Judge, based upon their opinion of the evidence and the respective witnesses during the trial. It is common for majority of matters to settle prior to a trial being required. However, there is instances where a trial may be required to obtain the judgment. Our expert debt recovery lawyers can assist in all aspects of Court proceedings, including obtaining a judgment through any of the above avenues.

Enforcement of Judgment

Once a judgment has been obtained against the defendant (debtor), then there a several avenues to enforce the judgment, including:

           Enforcement through the Court Processes:

• Statement of Financial Position – The statement is a document that is sent to the defendant for them to complete relating to their financial position. Under rule 807 of the UCPR, the defendant is required to complete and return the statement to plaintiff within fourteen (14) days, with any supporting documentation. If the defendant fails to do so, then the plaintiff can apply for the Court to set an enforcement hearing.

• Enforcement Hearing – An enforcement hearing is a fact-finding hearing, requiring the defendant to appear, provide documentation about their financial position and answer questions about their financial position.
   
• Enforcement Warrants – Subject to the defendant’s financial position, the plaintiff can apply to the Court for an enforcement warrant, including (without limitation), a warrant for seizure and sale of property, redirection of debt, regular redirections from financial institutions, redirection of earnings and payment by instalments. We will expand on these warrants in a separate article.
  
  Bankruptcy:
   
• Bankruptcy Notice – Once a judgment has been obtained and the defendant is an individual, the plaintiff can apply to the Australian Financial Security Authority (AFSA) or referred to under the Bankruptcy Act 1966 (Cth) as the ‘Official Trustee’. If accepted and issued by AFSA, the plaintiff can serve the bankruptcy notice on the defendant. Once served, the defendant has twenty-one (21) days to comply with the notice, reach an agreement with the plaintiff to discharge the debt or apply to the Court to set the notice aside. If the defendant fails to do any of these steps within the timeframe, they will be deemed to have considered an act of bankruptcy.
   
• Creditor’s Petition – If the defendant commits an act of bankruptcy, the plaintiff can bring a creditor’s petition to the Court, seeking a sequestration order that the defendant be made bankrupt, and a trustee be appointed over their assets. The trustee will review the defendant’s assets to determine whether assets can be sold, or funds utilised to repay the plaintiff (or other creditors).

            Winding Up:

• Statutory Demand - Once a judgment has been obtained and the defendant is a company, the plaintiff can issue a statutory demand under the Corporations Act 2001 (Cth), requiring the defendant to pay the debt or compound for the debt or apply to the Court to set the demand aside, within twenty-one (21) days. If the defendant fails to do so, they will be presumed insolvent.

            NOTE: You do not have to obtain a judgment to issue a statutory demand. A statutory demand can be issued at any point where a company has
            failed to pay a debt that is due and payable and that there is no genuine dispute over the debt. In circumstances where you have not obtained a
             judgment, an affidavit in support of the demand will need to be completed to demonstrate that the debt is due and payable and there is no
            genuine dispute about the debt.

• Winding Up Application - Upon the defendant being presumed insolvent, the plaintiff is entitled to file a wind-up application with the Court, seeking that the defendant be placed into liquidation and a liquidator be appointed over the company’s assets. The liquidator will review the defendant’s assets to determine whether assets can be sold, or funds utilised to repay the plaintiff (or other creditors).

Our expert debt recovery lawyers can assist with all avenues of enforcing the judgment, whether it be through the Court processes, bankruptcy or a statutory demand and a winding up application.

Business Coaching

At Odyssey Legal, we also coach businesses on implementing effective debt management processes and review and advise on the businesses contracts to strengthen the businesses’ ability to effectively recover their debts.

Conclusion

At Odyssey Legal, we understand that recovering debts can be a complex and time-consuming process. Our goal is to help you recover your debts efficiently and effectively, minimising the impact on your financial health. Unfortunately, the reality is that often proceedings are required to recover the debt, due to the refusal of the debtor to make payments when due and payable.

​If you’re struggling with debt recovery, let’s take the first step together. Schedule a free 15-minute consultation with debt recovery lawyers today, and let’s explore how we can assist you in this process.