Debt recovery services in Queensland can vary depending on a number of different factors.
Debt recovery services can range from informal services, all the way through to formal Court or insolvency proceedings.
Initially, before a creditor starts looking for debt recovery services from a debt recovery lawyer, they must first know the following information:
- Find out who controls the debtor business; then
- Get legal advice about that debtor; then
- A creditor can choose a type of debt collection service then need.
Traditionally, if a debt cannot be recovered informally by negotiation, then the creditor will have to seek an order from the Courts.
This order can then be enforced in a number of different ways.
This article will explain the debt recovery process and provide details about the different debt recovery services that are available.
We recover all commercial debts. Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.
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Debt Recovery Services
There are a number of different informal and formal debt recovery services.
These services usually follow the same process, informal services first, followed by formal services, followed by enforcement services. We will explain these below.
The informal debt collection services can include:
- Friendly reminders by email, text message, written reminders, telephone and face-to-face
- Informal negotiations to reach the desired outcome
- Issuing a lawyer’s letter of demand
- Searches – PPSR, Title Searches, Skip location searches, and ASIC searches
- Making field calls to the debtor
After the informal services, there are a number of formal debt recovery services, which include:
- Issue legal proceedings in Court.
- Making QCAT applications.
- Issuing a statutory demand.
- Lodgment of caveats on the debtor’s property.
- Obtaining judgments in legal proceedings.
- Subcontractor’s charges and payment claims.
- Issuing subcontractors charges.
- Process serving and repossession.
- Alternative Dispute Resolution.
If a creditor successfully obtains a judgment or enforceable money order in relation to this debt, and the debtor still refuses to pay, then a creditor will have to start enforcement proceedings.
Enforcement can include enforcing Court judgments and QCAT decisions by:
- Enforcement hearings/oral examination of debtors
- Enforcement warrants
- Winding up companies in insolvency
- Bankruptcy of people
- Enforcement of security interest
This article will explain these different types of debt recovery services below.
Informal Debt Recovery Services
In my personal view, litigation lawyers are more often negotiation lawyers.
If a matter can be settled informally by negotiation or alternative dispute resolution, then in most cases it probably should.
We will explain the informal debt collection services in more detail below.
Friendly Reminders by email, text message, written reminders, and telephone calls
Firstly, a creditor or a debt recovery lawyer can send friendly reminders to the debtor.
There might be a genuine reason why payment has not made, and they might just need to enter a payment plan or something similar.
Send emails and get delivery receipts. Ensure that you have evidence that the invoices and the reminder emails have been sent, as this may help you later.
The debtor might just need some more time, this is quite common.
You can send a friendly reminder first, followed by an overdue reminder, followed by a final notice until ultimately you will need to send a formal letter of demand.
Informal Negotiations to Reach the Desired Outcome
The debtor might be expressing dissatisfaction with the goods and/or services, and this is the reason for non-payment or underpayment.
Sometimes the works can be defective, or the goods and/or services are not 100%.
If this is the case, then you might need to negotiate a settlement with the debtor to reach an outcome that both parties are happy with.
Litigation lawyers are skilled negotiators and form a large part of the debt recovery services that we provide.
If negotiations fail, then you will need to send a formal letter of demand from a debt recovery lawyer.
Issuing a Lawyer’s Letter of Demand
A lawyer’s letter of demand is an important initial step in a debt recovery proceeding being a final demand letter before legal action.
A lawyer’s letter of demand letter, or overdue payment letter, states how much is owed, what for and when the invoice needs to be paid. It will also usually enclose the unpaid invoices.
It may also include a warning that you will consider legal action if the debt is not paid by a particular date, and what that legal action will look like, and the costs associated with that legal action.
If the letter of demand still falls on stubborn or deaf ears, then there are still some things that can be done before commencing legal action. A debt recovery lawyer can also provide the following searches.
Searches – PPSR, Title Searches, Skip Location Searches, and ASIC Searches
Further informal debt recovery services can include conducting searches.
Searches are conducted for a number of reasons, but mainly to gather further information about the debtor, and to inform the creditor about any associated risk.
PPSR – A search of the Personal Property Securities Register (“PPSR”) will show any registered security interests that the debtor (grantor) has against his/her/its personal property.
Title Searches – A search of the titles office online database will show if the debtor owns any real property in Queensland. A creditor can search by address of the property, or by lot on plan number.
Skip Location Searches – A skip location search, or a skip trace is a search to find debtors who are trying not to be found. This is important when commencing legal action to ensure that the debtor can be personally served with the documents.
ASIC Searches – The Australian Securities and Investments Commission (“ASIC”) have an online database that a creditor can search to find out the officers and members of a company. This is useful to find the address of the registered office of the company, but also the names, addresses and dates of birth of its officers.
Making Field Calls to the Debtor
A field call is performed by a licensed agent. A licensed agent can make a visit to the debtor at their work or home and make a demand for money.
The benefits of having a licensed field agent make a field call are:
- A demand for full payment can be made in person.
- A field call will confirm the whereabouts of the debtor.
- A payment plan can be made then & there in person.
- It shows that you will not be giving up on recovering the debt.
- The agent can explain the consequences of non-payment.
Having an agent make a field call is a great debt recovery service and can yield great results.
However, some experienced debtors will not pay unless you commence formal debt recovery services.
Formal Debt Recovery Services
If all informal avenues fail, or the debtor is just not attempting to settle this dispute, then a creditor will have to engage in more formal debt recovery services.
We will explain the formal debt recovery services below.
Issue Legal Proceedings in Court
A debt recovery action in the court is brought by claim and statement of claim.
The cause of action will likely be debt or breach of contract.
The different state courts have different jurisdictional limits:
- The Magistrates Court can hear debt claims up to $150,000.00.
- The District Court can hear debt claims from $150,000.01 to $750,000.00.
- The Supreme Court can hear debt claims over $750,000.00.
The debt recovery services that a debt recovery lawyer can provide include – drafting the claim and statement of claim; filing in the court with jurisdiction; service of the claim and statement of claim; drafting the affidavit of service; and advising on the above.
Once served, the debtor will have 28 days to draft, file, and serve a notice of intention to defend and a defence.
The objective of filing legal proceedings in the court is to obtain a judgment or enforceable money order which can be enforced over the property of the defendant.
Making QCAT Applications
Similar to the court, the Queensland Civil and Administrative Tribunal (“QCAT”) is essentially the ‘small claims’ court in Queensland.
QCAT has jurisdiction to hear debt claims up to $25,000.00.
The claim is started by application. A copy of the minor debt application is here – Minor Debt Form.
Alternatively, you can file online – Online Factsheet.
The pros of commencing proceedings in QCAT are:
- It is less expensive than commencing in the Court.
- The process can be a quicker than the commencing in Court.
- QCAT is designed for self-represented people.
The cons of commencing proceedings in QCAT are:
- The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items.
- Legal representatives do not have an automatic right of appearance. This means that if you want a debt recovery lawyer to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.
Alternatively, if the debtor is a company, it is unable to pay its debts when they fall due, and there is no genuine dispute about the debt, then a creditor can issue a statutory demand.
Issuing a Statutory Demand
If the insolvent debtor company has assets, then you can serve that company with a statutory demand for payment.
Failure to comply with a statutory demand raises the legal presumption that the company is insolvent.
If the debtor company does not do what is required in the demand within 21 days, then they are presumed to be insolvent and you can take steps to wind it up in insolvency.
Once served, the debtor company will have 21 days to do any of the following:
- Pay the amount claimed;
- Secure or compound for the debt;
- Make an application to the Court setting aside the demand.
They can also request that the statutory demand be withdrawn.
If they pay, or reasonably secure or compound (enter into an arrangement to pay) for the debt, then the statutory demand is satisfied.
If they have grounds to set the demand aside, then before making the application, they may simply request that the demand be withdrawn.
Based on the strength of their application to set the demand aside, we can offer you legal advice if this happens as part of our debt recovery services.
If they ask that you withdraw the demand, and you do not, then you may be liable to pay their costs of the application to set the demand aside if they are successful.
Lastly, they have four (4) main grounds for setting aside the statutory demand, they are:
- There is a genuine dispute as to the existence or amount of the debt; and/or
- They have a genuine offsetting claim; and/or
- There is a defect in the demand which is likely to cause substantial injustice; and/or
- Some other reason.
The bar for setting aside a statutory demand is quite low.
All that a debtor needs to do is prove to that any of the above exist, and the demand will likely be set aside.
If you have a caveatable interest, then a creditor can also lodge a caveat on the title of the debtor’s real property.
Read our complete guide to statutory demands.
Lodgment of Caveats on the Debtor’s Property
A caveat is a formal notice lodged on the title of a debtor’s real property.
A caveat stops anybody from having any dealings with the real property the subject of the caveat.
Judgments do not automatically give a right to lodge a caveat (a caveatable interest).
A caveatable interest can arise from a debt directly related to an equitable interest in the real property in question or can be given in a contract by way of a charging clause.
The effect of a caveat is that the debtor property owner cannot sell or deal with the real property while the caveat is on title.
Read the Land title Practice Manual on Caveats.
Obtaining Judgments in Legal Proceedings
There are three (3) ways to obtain judgment against the debtor:
- Judgment after a trial.
- Default judgment.
- Summary judgment.
Default judgment – If the debtor does not file a defence within the requisite time then you can apply for a judgment in default. This will be judgment for the full amount, plus costs, plus interest.
Summary Judgment – If the debtor does file a defence, but there is no defence to this matter then you can apply for a summary judgment if the court is satisfied that:
- the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
- there is no need for a trial of the claim or the part of the claim.
Summary judgment is a lot harder to get and will only be given in the clearest of cases.
Judgment after Trial – obviously, if the matter goes all the way to a trial, and you are successful, then the debtor / defendant will be ordered to pay an amount plus costs and interest.
The purpose of obtaining a judgment is to then enforce that judgment over the property of the debtor.
Payment Claims & Adjudication
There is legislation which covers debt disputes arising from building and construction industry debts.
If you have an eligible construction contract for work defined as construction work, or the provision of related goods and services, then you might have a right to a progress payment.
Once a payment claim has been made, the debtor has to serve a payment schedule. If they do not, or the amount is different to the payment claim, then the creditor can make an adjudication application.
An adjudication application is a way to quickly recover debts without the cost of commencing Court action.
From the date of service of the payment claim, the adjudicator can have a decision to the adjudication application in around ten (10) weeks and will issue an adjudication certificate.
Once registered in the Court, the adjudication certificate becomes an enforceable money order in the Court and can be enforced as if it were a judgment of that Court.
Read our article – Making a Payment Claim – BIFA (QLD) for more information.
Issuing Subcontractor’s Charges
A subcontractor’s charge is a charge on money payable to the contractor (by a head contractor, developer, homeowner, etc).
A subcontractor can charge those funds if he/she has not been paid by the contractor, and the head contractor, developer, homeowner, etc must not pay those funds to the contractor.
This raises the subcontractor to a secured creditor and allows the subcontractor to commence legal action to release those funds to the subcontractor.
It is a great way of securing funds and puts a creditor subcontractor in a better position to get paid.
Read our article – Subcontractors’ Charges for more information.
Process Serving and Repossession
A court bailiff is usually the person to go to when we require process serving and repossession services.
Process serving – This is the act of serving the originating process (claim or application) on the defendant or respondent personally.
Repossession – As most people know, a person who is unable to pay for goods is at risk of having those goods repossessed. This can happen by court order, under the Personal Property Securities Act 2009 (Cth), or by enforcement warrant after judgment.
Alternative Dispute Resolution
There are a several different alternative dispute resolution methods including adjudication, arbitration, conciliation, expert determination, mediation, and/or negotiation.
Arbitration
The parties pick an independent person called the arbitrator who essentially acts as the judge. The arbitrator will decide the case and this decision is legally binding and final for all parties involved.
Conciliation
This is similar to mediation. There’s an independent person called the conciliator that helps the parties involved in a dispute work out issues so there’s a resolution to the dispute.
Mediation
The mediator is an independent person (usually a barrister) who helps the parties work out the issues in a dispute and tries to find a solution that everyone can agree to.
The purpose of the mediation is to reach a settlement of the dispute which will be put into a deed of settlement.
Negotiation
A negotiation will usually be the most cost-effective way of resolving debt disputes. We can negotiate on your behalf, both on an open and without prejudice basis.
The Queensland Law Society has great information on alternative dispute resolution.
As stated above, the purpose of the formal proceedings is to obtain a judgment which is legally enforceable against the debtor defendant.
Legal Enforcement Services
When a creditor obtains an enforceable money order and the judgment debtor still refuses to pay, then the creditor will have to enforce that money order against the property of the debtor.
There are a number of different legal enforcement services, which we will explain in more detail below.
Enforcement Hearings/Oral Examination of Debtors
Another debt recovery service that a debt recovery lawyer can assist with is enforcement hearings.
If a creditor (judgment creditor) has received an enforceable money order wants to enforce the judgment, then the judgment creditor is expected to have a certain level of proof or evidence of the requirements for the warrant.
Usually, a judgment creditor will not know this information. A judgment creditor will rely on the content of the statement of financial position, and what is said and provided at the enforcement hearing / oral examination of the judgment debtor.
Once the judgment creditor has the requisite information then they can ask the court to exercise its discretion and issue an enforcement warrant.
Enforcement Warrants
Another debt recovery service that a debt recovery lawyer can assist with is obtaining enforcement warrants from the Court.
There are a number of different types of enforcement warrant or enforcement orders that can be made by the Court. These enforcement warrants include:
- Enforcement warrants for seizure and sale of property.
- Enforcement warrants for redirection of debts.
- Regular redirections from financial institutions.
- Enforcement warrants for redirection of earnings.
- Order for payment of order debt by instalments.
- Enforcement warrants for charging orders.
- Enforcement warrants for appointment of a receiver.
Different warrants will apply in different circumstances, and not all will apply in all situations.
Once you have the information needed for the Court to exercise its discretion to issue a warrant, then a judgment creditor can make the application.
However, if the judgment debtor is a company, then they can also use the insolvency process to enforce the judgment debt.
Winding up Companies in Insolvency
Another debt recovery service that a debt recovery lawyer can assist with is winding up an insolvent company.
The judgment debtor can issue a statutory demand supported by a judgment rather than an affidavit.
The winding-up process is an originating application in the Federal Court or Supreme Court.
A judgment creditor will need to file an application, affidavit of service of the statutory demand, and a further supporting affidavit:
- Containing details of the failure of the company to comply with the Statutory Demand.
- Stating whether and, if so, to what extent the debt, or each of the debts, to which the Statutory Demand relates is still due and payable at the date when the affidavit is made.
- Annexing a copy of the ASIC search of the company.
Once filed and sealed with the Federal Court seal, the documents will need to be served on the debtor company. Other steps to be taken include (amongst others):
- Notification to ASIC of the winding-up application.
- Obtaining consent of a Liquidator.
- Publishing a notice of the ASIC Insolvency Notices website.
Once served, they can attempt to defend the winding-up action.
A debtor company can oppose a winding-up application of the following grounds:
- Solvency – the debtor company will need to prove solvency. The Courts have called this process “an onerous task and likely to be an expensive process for the company”.
- The Court may take into account the views of other creditors and whether those creditors oppose the application when deciding whether or not to exercise its discretion to make a winding up order.
- The statutory demand, or service of the statutory demand, was deficient.
- Where creditors have a better prospect of payment without winding up.
However, in a lot of cases the Court has found that it is in the public interest to wind-up an insolvent company.
Bankruptcy of People
Another debt recovery service that a debt recovery lawyer can assist with is bankruptcy.
If the judgment debtor is a person, then they can also use the bankruptcy process to enforce the judgment debt.
If a judgment creditor wants to make a judgment debtor bankrupt, then there are some threshold steps that must be met:
- The judgment debtor must be a natural (human) person.
- The judgment debtor must have a judgment or order from the Court of $10,000.00 or more.
- The judgment debtor must apply for a bankruptcy notice from AFSA.
- The judgment debtor must serve the notice on the judgment debtor.
- The judgment debtor must file a creditor’s petition with the Federal Circuit Court.
- Then, if everything is done correctly, the judgment debtor will be given a sequestration order from the Court.
The bankrupt’s property (except exempt property) vests in the bankruptcy trustee and can be sold to pay the bankrupt’s creditors.
Enforcement of Security Interest
Further debt recovery services that a debt recovery lawyer can assist with is with the enforcement of security interests.
As above, a security interest can be a charge (PPSA or caveat for example), a mortgage, or a lien.
A debt recovery lawyer can help you enforce your security interest by whatever means are available at law or in equity.
Debt recovery lawyers also provide a number of other debt recovery services.
Other Debt Recovery Services
Remember that old saying “prevention is better than cure”? Some well-prepared legal documents can assist a creditor greatly in relation to the recovery of debts.
Debt recovery lawyers will also offer legal services in relation to:
- Reviewing and preparing credit agreements.
- Reviewing and preparing terms and conditions.
- Reviewing and preparing guarantees.
Contact a debt recovery lawyer for more on these debt recovery services.
Types of Industries who need Debt Recovery Services
Essentially, any business can incur a bad debt. It would be a unique business model that did not have an unpaid invoice at some time in the life of the business.
However, there are several industries which seem to incur more debts than others, they include:
- Wholesalers and manufacturers.
- Construction, tradespeople, contractors & subcontractors.
- Medical providers, doctors, and hospitals.
- Commercial businesses offering trade credit.
- Body corporate schemes & body corporate management.
- Education providers, schools, and universities.
- Hardware businesses that offer trade credit to the construction industry.
- Rental or hiring companies – yellow goods, white goods, vehicles, etc.
- Unpaid commercial rent – lessor / lessee.
- Professional services – lawyers / accountants.
- Financial and insurance services.
- Any Queensland small business that has unpaid invoices.
We recover all commercial debts. Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.
CONTACT OUR DEBT RECOVERY LAWYERS
OR CALL: 1300 545 133 FOR A FREE PHONE CONSULTATION
Debt Recovery Services FAQ
We get asked a lot of the same questions in relation to debt recovery services.
How do you collect unpaid debt?
Unpaid debt can be collected by a debt collector or by a debt recovery lawyer in the court or in the minor debt tribunal.
What kinds of people or businesses can use debt recovery services?
Any business that offers credit terms will sometimes have bad debts. These businesses will use the services of a debt collection lawyer.
Does an unpaid debt ever go away?
In NSW, the debt is extinguished, however in the rest of Australia the debt never goes away, it is just legally unrecoverable after the limitation date.
How long can you legally be chased with debt recovery services?
Six (6) years in all states and territories in Australia except the Northern Territory which is three (3) years.
We recover all commercial debts. Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.
CONTACT OUR DEBT RECOVERY LAWYERS
OR CALL: 1300 545 133 FOR A FREE PHONE CONSULTATION
