Consider using the following steps:
Send a friendly payment reminder to the customer
Once the payment is overdue, make contact with the customer via phone email or mail to remind them that payment is overdue. The customer may have forgotten or unknowingly had technical issues in making the payment. Most of the time your reminder will be enough to induce payment. It is important to include your contact information, preferred payment methods and banking details to make it easier for the customer to pay you.
Send an overdue payment reminder
If the payment remains outstanding and the customer has not been in contact, send another email or letter reminder of the outstanding money and request payment.
Send a formal letter of demand
In the event that all attempts to contact the customer have failed, consider engaging a solicitor to send a letter on your behalf requesting immediate payment. It is important to specify a date by which payment before the commencement of legal action. A strongly worded letter threatening legal action can often work wonders in encouraging the debtor to pay up.
If steps outlined above are unsuccessful in recovering the outstanding amount, you may need to start legal proceedings. Your solicitor can advise you on the most appropriate forum to recover the debt. In the ACAT, proceedings can be commenced in:
- ACT Civil and Administrative Tribunal (“ACAT”) if the debt is less than $10,000;
- Magistrates Court if the debt is between $10,000 and $250,000; and
- Supreme Court if the debt is above $250,000.
If the debtor does not defend the proceedings within 28 days, you can apply to the ACAT or Court for “default judgment” which is where the judgment is made in your favour. At this point in time your claim for the outstanding monies is converted to a judgment debt.
If the debtor defends the claim, and the dispute cannot be resolved by negotiation, then the ACAT or Court will set a date for hearing.
Enforcement of judgement debt
Firstly, if the financial position of the debtor is unknown, an Enforcement Hearing Subpoena can be issued against the debtor requiring them to file a statement of their financial position with the Court and attend Court to be examined about their financial position.
If the debtor has money and assets to pay the debt, there are several options available to enforce the judgment debt against the debtor. These include:
- Debt Redirection Order directing the debtor’s employer to direct some of the debtor’s wages to pay off the debt;
- Seizure and Sale Order ordering a Sheriff to take and sell the debtor’s goods to satisfy the judgment debt; and
- commencing bankruptcy proceedings against the debtor
If you or your business would like Griffin Legal’s assistance to recover an outstanding debt, please contact our Litigation Team on (02) 6162 1613.