At one time or another, all businesses confront the unpleasant task of collecting outstanding fees for the services or products they have provided. When a client refuses to pay an outstanding invoice, recovering the money due may turn into a drawn-out process, even when the amount owed appears un-contentious. Engaging a solicitor to assist with the debt recovery process has the benefit of both impressing on the debtor your commitment to pursuing the debt and simplifying an otherwise frustrating process.
Typically, we recommend approaching debt recovery in the following manner:
- Issuing a Demand
In the case of an individual, a simple letter demanding payment of the sum outstanding can often prompt a reluctant debtor into at least entering a dialogue regarding when payment may be expected, or why it is currently being withheld. If the debtor is a company and the debt is not disputed, you can go a step further and issue a statutory demand to the company, indicating an intention to liquidate the company unless payment is made within 15 working days.
- Pursuing the Debt
If a demand for payment is ignored, it may then be appropriate to issue proceedings against the debtor. There are a number of avenues that can be pursued in this regard. For instance, if the debt is less than $15,000.00 and the matter is not particularly complex, it may be worthwhile applying to the Disputes Tribunal to hear the matter, in which case you will probably not require a lawyer to represent you. However, some clients prefer to go direct to the District Court, even if the debt is less than $15,000.00, as you are able to include solicitor costs and filing fees in the final application for judgment.
- Enforcing the Judgment
Under the new District Court Rules it is relatively easy for a creditor to proceed to judgment against a debtor who has failed to respond to the proceedings issued against them. Obtaining judgment means that the sum outstanding is theoretically due upon demand by the creditor. However, before any steps in the debt recovery process are commenced, due consideration should always be given to whether or not you will be able to enforce your judgment. If the debtor owns property or is earning a steady wage, there are a number of effective enforcement avenues that can be pursued with the assistance of the District Court.
Debt recovery is not always a quick process, but there are options available to businesses and individuals getting the run around from delinquent debtors.