With economic conditions in the world having deteriorated over the last few years, many companies are finding it difficult to pay debts that they owe.
If you are a company or person owed a debt by another company, you have several options in recovering that debt, namely:
- Instruct us to send the company a letter of demand requesting payment within a certain number of days;
- Engage us to commence legal proceedings (in the appropriate Court or the Queensland Civil and Administrative Tribunal); or
- Instruct us to send the company a Statutory Demand.
Letter of Demand
Letters of demand are useful tools in recovering debts. Often times a letter from a Solicitor requesting payment from a company is enough to persuade a company to organise payment of the debt.
A letter of demand however has no legal effect, and if the company does not pay within the time allocated in the letter of demand either legal proceedings will have to be commenced, or a Statutory Demand issued to attempt to recover the debt.
Legal proceedings
Legal proceedings can be used to recover a debt. What needs to be kept in mind though is that legal proceedings can be a lengthy and costly exercise, and should only be commenced if the company in question fails to respond to a letter of demand.
Where money is owed, there are several options for recovery.
If the debt is $25,000 or less, you may commence proceedngs by way of an Application for Minor Civil Debt in the Queensland Civil and Adminitsrative Tribunal (QCAT). Legal representation is not usually allowed in QCAT proceedings although McCarthy Durie Lawyers can assist you in preparing, filing, serving and advising you throughout the proceedings. Legal costs are not usually recoverable, however the Applicant if successful will be able to recover the filing fee and interest.
If, however the debt is in excess of $25,000, proceedings may be commenced in the Magistrates Court (if the debt is $150,000 or less), the District Court (if the debt is $750,000 or less), or the Supreme Court (if the debt exceeds $750,000). Costs in Court proceedings will vary depending on the complexity of the matter, whether the other party defends the claim or whether proceedings settle prior to trial.
Statutory Demand
A Statutory Demand is akin to a legal letter of demand requiring the company to pay the alleged debt within 21 days (or bring an Application in Court to have it set aside). If the company fails to pay the amount in the Statutory Demand or fails to bring an Application within 21 days, the company is deemed insolvent and liable to being wound up (i.e. a liquidator will take over control of the company, sell all its assets and pay as many creditors as it can).
Statutory Demands are required to be in a particular form (i.e. there is a particular Court form used for a Statutory Demand) and must be accompanied by an Affidavit (sworn statement) from the person or entity owed the money. In the case of a company being owed money, a Director of the company must sign the Affidavit. Additionally, Statutory Demands can only be used in respect of liquidated debts (i.e. debts that can be readily calculated and that are due and owing).
Conclusion
If you need advice on the most effective and efficient way to recover money owing to you, McCarthy Durie Lawyers can provide comprehensive advice on all debt recovery options.
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