Debt Recovery Challenges

In November 2015 Griffin Legal published a blog outlining the debt recovery processes in the ACT. In this blog, we touch on some of the challenges faced by our clients in the debt recovery area, and what can be done in order to counteract those challenges.

Challenge

The debtor is disputing the amount owing.

Recommendation

Communication is key, from when an agreement is first made. A contract must clearly set out the obligations of both parties, and the relevant fees for the goods and/or services to be provided. Continued communication throughout the term of the arrangement is also important, so that all parties understand the amount of the debt, and what additional fees will be incurred. Maintaining frequent communication may prevent confusion in relation to the debt, and in any event creates useful evidence as to the calculation of the debt. Communication may prevent a dispute arising.

Challenge

You cannot locate the debtor, or the debtor is avoiding service of Court documents.

Recommendation

This is a common problem, particularly for stages of proceedings that require personal service, such as the service of an enforcement hearing subpoena. There are ways of locating a debtor if you are not aware of their address, such as by obtaining a skip trace, which is an extensive search undertaken by a process server. However, obtaining a skip trace is expensive, and does not always achieve the desired outcome. We have recently had success in obtaining orders for substituted service by electronic methods such as Facebook. It is important to maintain extensive records of communication methods with debtors, including email addresses, so that orders for substituted service may be obtained if and where necessary.

Challenge

The debtor agrees the amount is owing, but says they can’t pay.

Recommendation         

The lesson here is to commence the debt recovery process early. This means that the chance of recovery in relation to the particular debtor will generally be higher. In the event that a larger debt has accrued, there are enforcement options available such as installment orders and earnings redirection orders which may be available.

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