Recovering Your Debts in New South Wales
Updated: Mar 31, 2022
Defining Debt Recovery
Debt recovery is the legal procedure by which a creditor can initiate to recover the money owed by the debtor. A debt may arise when one individual lends money to another on the condition that the second person will pay back but does not, or when a client fails to settle their payment regarding the purchase of goods and service. Thus, businesses also face debts from their clients resulting in the reduced profitability or negative effect on their cash flow.
Debt Recovery in NSW
The process usually starts in the same way it does in other Australian states. Direct communication is applied between the creditor and the debtor. If the debtor fails to pay, the creditor attempts to recover the debt by contacting the debtor and learn why the debtor has not been able to repay. If the debtor fails to respond in a satisfactory manner, the usual consequence is going to court.
The next step for the creditor is to send a Letter of Demand to the debtor stating that they have a limited time period or a particular date to formally settle the owed amount. In addition, the LoD warns the debtor that if no payment is made, appropriate legal action may be taken.
In case of commencing proceedings in New South Wales, the creditor must prepare a Statement of Claim and file it in court. If a defence is filed by the debtor, both parties must present evidence and appear for a hearing. Nonetheless, if the debtor does not file a defence, the creditor has the right to apply for a Default Judgement. The creditor must enforce a court judgement if the debtor refused to adhere with it and fails to pay the amount due. Creditors in New South Wales can commence enforcement proceedings at any time approximately to 12 years after the date of the judgement.
Why Contact a Law Firm and Not a Debt Collector Agency?
The primary benefit of using a law firm to collect an existing debt is that a law firm will act in a highly regulated and professional manner, bringing a legitimate level of credibility and professionalism to the process of pursuing the amount owed. For instance, a solicitor, will typically charge on a ‘time and attendance’ basis, as opposed to a traditional debt recovery firm, which will typically charge a very large percentage of the debt for their services.
Need Legal Advice?
If you would like to know more about how we can help you recover your debt, give us a call or send us an email and we will promptly answer your queries.