A debt recovery lawyer is a legal practitioner who specialises in the recovery of debts and debt recovery law.
With its main office on the Sunshine Coast in Queensland, Stonegate Legal can recover business debt, personal debt, corporate debt, or any debt.
Debt recovery solicitors are very different to debt collectors and work very differently.
Debt recovery lawyers use the Court to legally recover debts from a defendant, or if they still refuse to pay, then enforce the judgment / money order over the property of the defendant.
This article will explain the differences, and outline the debt recovery process in Queensland.
Debt Recovery Lawyer in Queensland
The most common cause of action for debt recovery is breach of contract.
The payment of money under a contract for goods and/or services is called consideration.
Failure to pay consideration under a contract usually allows the non-breaching party to commence legal proceedings to recover the debt from the breaching party.
The debt recovery process can be very difficult to navigate, especially if you have an experienced debtor. It is very important to get advice from dedicated debt recovery lawyers in Queensland.
Debt Recovery Process in Queensland
Firstly you should attempt to contact your debtor and communicate with them.
You must have heard the English proverb:
you can catch more flies with honey than with vinegar
Initial communication should be courteous, well-mannered, and respectful.
Don’t leave the time for payment open, lock them into a time-frame, and say one (1) week or the beginning of next month, or something. Give them a fixed time for compliance.
If they refuse to pay on your agreed time stipulations, then you should send formal letters of demand.
Letter of Demand
Read our letter of demand page for formal requirements for a letter of demand.
At a very minimum a letter of demand should include:
- Amount of the debt;
- Date the debt was due and payable;
- Date of the Letter of Demand;
- Description of the debt (such as what the money is owed for); and
- Any relevant evidence such as contracts, invoices, emails agreeing to work or other written agreements that you have with the person/company you are claiming the money from.
- A time and date on which the debtor has to pay the debt. We suggest giving then 7 or 14 days.
If the letter of demand goes unanswered then it is time to commence debt recovery proceedings in Court.
Commence Proceedings in Court
A proceeding for debt recovery is started by a claim and statement of claim. The claim is Form 2 of the UCPR forms and a statement of claim is Form 16 of the UCPR forms.
The monetary jurisdiction in Qld courts are as follows:
- Magistrates Court monetary limit – up to $150,000.00
- District Court monetary limit – up to $750,000.00
- Supreme Court monetary limit – over $750,000.00
There is also a minor debt jurisdiction in the Queensland Civil and Administrative Tribunal (“QCAT”) of minor debts up to $25,000.00.
Proceedings commenced in QCAT are started by an application for minor civil dispute – minor debt. You can download the minor debt form here.
Once jurisdiction has been determined, you can commence your debt recovery claim. Be mindful that there are limits to the types of matters QCAT can hear.
Commencing debt recovery proceedings in the Courts is very complicated and it is very important that you engage a suitable qualified debt recovery lawyer to act for you.
What do Debt Recovery Lawyers do?
To manage a legal debt recovery matter from start to finish, a debt recovery solicitor may have to do any or all of the following:
- Drafting and/or responding to complex letters of demand – including using legal arguments and the application of often complex case law and precedents;
- Commencing proceedings or defending debt recovery proceedings in the Court with jurisdiction or in QCAT;
- Locating the debtor and effecting service of initiating processes and documents and drafting affidavits of service and/or attempted service;
- Managing the litigation process and limiting the client’s risk to adverse costs orders being made against them;
- The enforcement of judgments and money orders through the Court or by initiating bankruptcy proceedings and/or the liquidation process;
- Drafting and service of creditor’s statutory demands and managing the winding-up process;
- If applicable, drafting and lodgment of caveats on the debtor’s real property as security for the debt;
- Seizure and sale of debtor’s real property and/or personal property;
- Attempting to negotiate with the debtor or the debtors solicitors in an effort to resolve the matter without further cost to the client;
- Drafting and enforcing deeds of settlement, deeds of acknowledgement of debt and other alternative dispute resolution instruments;
- Enforcing judgments or money orders by application of a number of different enforcement warrants, i.e. redirection of earnings; and
- So much more.
Debt recovery solicitors will give you advice and assistance at every stage of the debt recovery proceedings. It is vital, if you want the best chance of recovering your debt, that you engage a suitable qualified debt recovery lawyer.
6 Things you should know about Debt Recovery
Debt recovery can be a lengthy process
Sometimes a debtor will settle a legal matter and pay what they owe. Sometimes the debtor will do everything that they can to stall the proceeding. Be mindful that a proceeding run all the way to a trial may take twelve (12) months or longer to get a judgment.
If the debtor becomes insolvent then it may take a lot longer than twelve (12) months.
Debt recovery can be quite expensive
If the debtor is a self-represented litigant then your legal costs could blow out having to deal with someone who doesn’t know the system.
Even so, a proceeding for debt recovery can become very expensive, very quickly. Be sure to be represented by a debt recovery lawyer who discloses the costs before taking any action on your behalf.
Debt recovery is not like you have seen on television
Sometimes we are asked if we can kick the debtor’s door down and repossess their property, like they have seen on American reality television shows.
Australia is not America and so you should not gauge the debt recovery process in Australia by what you have seen on the television.
Yes, a bailiff can gain access to a real property. Yes, a bailiff can repossess some personal property. There are requirements which must be met first, and processes which must be followed before this can happen.
A debt recovery lawyer may not recover the debt at all
Some debtors are what we sometimes call “litigation proof”!
If your debtor has no job, an inexpensive car and no real property, it is likely that they will have no means of satisfying their debt to you.
Further, if the debtor company is wound-up and/or the director is made personally bankrupt, and there is no money in the company or the debtor’s personal estate then you may not receive a dividend from the insolvency proceeding at all.
Debtor might move interstate and disappear
Sometimes debtors take very evasive measures to avoid their obligations to creditors. It is quite common for debtors to move interstate – run away. You should be mindful that if this happens then it might be difficult to find this debtor and enforce the money order or judgment against them.
You will never get 100% of your costs back
Client’s often say to us that they want the debt and 100% of their costs, including legal costs and the cost of their time it has taken to chase this debt.
Section 703(3) of the UCPR says that:
When assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to—
(a) the scale of fees prescribed for the court; and
(b) any costs agreement between the party to whom the costs are payable and the party’s solicitor; and
(c) charges ordinarily payable by a client to a solicitor for the work.
So even if you are awarded cost on the indemnity basis, all costs reasonably incurred may not mean all costs incurred. You may get a good percentage of costs awarded, but it is not likely to be ALL of your legal costs.
Why Hire a Debt Recovery Lawyer
As you can see, debt recovery can be very complicated. If you want to have the best chance of recovering your debts then it is important that you engage a suitably qualified legal practitioner to act for you.
What is the Difference between a Debt Recovery Lawyer and a Debt Collector?
A debt collector is not a legal practitioner. A debt collector is a person employed by a debt collection agency to perform any non-legal tasks to collect any outstanding debts. A debt recovery solicitor is a qualified legal practitioner, admitted to practice law in Queensland.
A lot of debt collectors may charge a percentage of the amount that they manage to recover. Debt recovery lawyers are not allowed to charge in this way.
Section 325 of the Legal Profession Act 2007 (QLD) says:
A law practice must not enter into a costs agreement under which the amount payable to the law practice, or any part of that amount, is calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates.
FAQ on Debt Recovery Lawyer
This FAQ section provides clear answers to common questions about debt recovery lawyers and the debt recovery process in Queensland.
It offers valuable insights into the roles, procedures, and considerations involved in legally recovering debts.
What is a debt recovery lawyer?
A debt recovery lawyer is a legal practitioner who specialises in recovering debts through legal processes. They handle court proceedings and enforcement actions to ensure that debts are paid.
How does a debt recovery lawyer differ from a debt collector?
A debt recovery lawyer is qualified to practise law and can initiate court proceedings to recover debts. In contrast, a debt collector is not a legal practitioner and handles non-legal tasks to collect outstanding debts.
What is the first step in the debt recovery process?
The first step is to contact the debtor and attempt to negotiate payment. If this fails, a formal letter of demand is sent, outlining the amount owed and the deadline for payment.
What should a letter of demand include?
A letter of demand should include the amount of the debt, the due date, the date of the letter, a description of the debt, and any relevant evidence such as contracts or invoices. It should also specify a deadline for payment, typically 7 to 14 days.
What happens if the debtor does not respond to the letter of demand?
If the debtor does not respond or refuses to pay, the next step is to commence legal proceedings. This involves filing a claim and statement of claim in the appropriate court.
What are the monetary jurisdictions for debt recovery in Queensland courts?
The Magistrates Court handles claims up to $150,000, the District Court up to $750,000, and the Supreme Court handles claims over $750,000. Minor debts up to $25,000 can be handled by the Queensland Civil and Administrative Tribunal (QCAT).
What role does a debt recovery lawyer play in court proceedings?
A debt recovery lawyer drafts legal documents, initiates court proceedings, serves documents, manages litigation, and enforces judgments. They provide legal representation and advice throughout the process.
How long can the debt recovery process take?
The debt recovery process can be lengthy, especially if the debtor disputes the claim or becomes insolvent. It can take up to 12 months or longer to obtain a judgment and enforce it.
What costs are involved in debt recovery?
Debt recovery can be expensive, with legal fees, court costs, and other expenses. It is important to discuss costs with your lawyer beforehand to understand the potential financial implications.
Can I recover all my legal costs in a debt recovery case?
While you can recover some legal costs, you will not typically recover 100% of your costs. Costs are awarded based on what is considered reasonable and necessary, and full recovery is rare.
What if the debtor moves interstate or disappears?
Debtors may take evasive measures to avoid repayment, such as moving interstate. This can make it challenging to locate and enforce the judgment, but a debt recovery lawyer can assist in tracking and taking action against the debtor.
What if the debtor has no assets or income?
If the debtor has no assets or income, recovering the debt can be difficult. In such cases, the debtor may be considered “litigation proof,” meaning they have no means to satisfy the debt.
Can a debt recovery lawyer help with insolvency proceedings?
Yes, a debt recovery lawyer can initiate insolvency proceedings, such as bankruptcy or liquidation, to recover debts. This involves investigating the debtor’s financial affairs and realising assets to pay creditors.
Why is it important to hire a debt recovery lawyer?
Hiring a debt recovery lawyer increases your chances of successfully recovering the debt. They have the legal expertise to navigate complex procedures, draft proper documents, and enforce judgments effectively.
What should I do if I need to recover a debt?
Contact a qualified debt recovery lawyer to discuss your case. They can provide advice on the best course of action, draft necessary documents, and represent you in court proceedings to recover the debt.
