Debt Recovery FAQs
Author(s):LAC Lawyers
Publish Date: April 25, 2008
Q. What are the time limitations?
A. Legal action to recover a debt can be commenced at any time within six years from when the debt becomes "due and payable" in full. For some debts the six years starts from the time the debt is incurred and for other debts the six years starts at a later time so make sure you check with a lawyer before refusing to pay an old debt. If you have "confirmed" the debt, either by admitting that you owe the money or making a payment, the time limit starts from the date of the confirmation. So, for example, every time you make a payment on a loan you are starting the six year limitation period again. If you have a debt which is "out of time", you should seek legal advice about whether or not you still have to pay the money back.
Q. What is a Statement of Liquidated Claim?
A. A Statement of Liquidated Claim is an official court document prepared by someone who thinks they are owed some money. They must then give a copy of the Statement of Liquidated Claim to the person who they say owes them the money. This is called service.
If you receive a Statement of Liquidated Claim you must act quickly if you want to defend the claim. You only have 28 days to submit a defence or you risk having default judgement made against you. This means that the case will be heard in Court in your absence and the Court can order that you owe the money that the other person is claiming. You should never ignore a Statement of Liquidated Claim and should always make sure you get legal advice straight away.
Q. How Do I Defend The Claim?
You can defend the claim by filing a "Notice of Grounds of Defence stating the reasons why you do not owe the money. You will also have to arrange for a copy of your defence to be served on the Plaintiff. A solicitor can help you with your defence.
Q. What Happens If I Don't Defend The Claim?
A. You will most likely have default judgement made against you. This means that the court has found that you owe a debt to the creditor. The money can be claimed from you anytime within 12 years of the date of the judgement. You should seek legal advice immediately.
Q. What Happens If I Am Unable To Pay The Debt In Any Way At All?
A. If the debt is $2000, (or presumably, more) the person who you owe can start proceedings to bankrupt you. There are many serious implications of being bankrupt. You can also go bankrupt voluntarily but you should seek legal advice before deciding to do this.
Q. Should I attempt to recover small debts?
A. In all cases you should try to recover whatever money is outstanding to you. If it becomes obvious that the debtor has no funds available then you would be wasting your time to take the matter further as all you would incur is further costs with little or no prospect of payment.
Q. Where debts are on-sold can the purchasers of these still pursue these for instalments owed to others?
A. Yes.
Q. Which jurisdiction has the power to deal with debt recovery claims?
A. The Local Court civil division has jurisdiction to deal with debt recovery claims up to the value of $60,000, or if all parties consent, up to $72,000. You will need to commence action in either the District Court or Supreme Court if the amount of money that is owed exceeds $72,000.
Q. Do I have to go to Court in order to recover money owed to me or can I recover it some other way?
A. There are various options available to you in order to recover monies owed to you, however, before you commence legal action, you should contact the person who owes you money and negotiate an agreement. Community Justice Centres can be very helpful in assisting you.
If this does not work, you should send the person a letter of demand.
Q. Do I have to obtain the services of a legal practitioner when commencing action in the Local Court?
A. No, however obtaining legal advice is highly advisable, particularly prior to commencing a court case.
Q. How do I commence legal action to recover money?
A. Once we have been instructed to act for you, we will be able to assist you in this regard.
Q. Can I claim interest on the amount owed to me?
A. Yes. It will depend on the amount and whether there was an agreement for interest to be paid, but usually, you may claim interest from the date that the cause of action arose pursuant to a prescribed rate. We will be able to calculate this for you and advise you accordingly.
Q. We have been dealing with a company who has been providing services to us for some years and we have always paid them 60 days. Recently due to changing business conditions we have not used their services and have been served with a statement of claim claiming amounts outstanding past 14 days. Is there anything we can do in these circumstances and can you help us?
A. Yes. We would need to examine their paperwork to ascertain what their normal terms of credit are. Irrespective if they have continued to allow you 60 days credit as part of the course of commercial dealing then you may very well have a defence in the matter. You will need to lodge a defence to protect your position, however, in the meantime we would need to negotiate with the plaintiff to reach an acceptable outcome without the necessity for further involvement of the court and to limit costs.
Contact us now for Fast, Accurate and Timely legal advice
Phone LAC Lawyers on NSW 1300 799 888 or VIC 1300 734 638 or send us an email
Back
|