Have you loaned money but since been struggling to be repaid? Do you know how to recover loans and other debts in Queensland?
Debt recovery can be a daunting task for any individual or business, especially when it comes to outstanding debts owed by others. Whether it is an unpaid invoice or an overdue loan repayment, the process of recovering debt can be time-consuming, stressful and expensive.
What Should I Know If I'm Seeking Debt Recovery?
Legally speaking, a debt must be for a liquidated amount or sum - a fixed amount or an amount that is easily calculated. If you are owed money, you are legally referred to as the creditor and the person or entity who owes you money is referred to as the debtor.
Debt can be recovered through legal proceedings in the Queensland Civil and Administrative Tribunal (also known as QCAT), the Magistrates, District or Supreme Court of Queensland. Which institution depends of the amount of debt being claimed and the type of relief being sought.
In some matters your interest and legal costs can also be claimed when pursing your debt claim but this is also dependent on which Court or Tribunal is involved in the case.
It's important to be aware also that, when it comes to debt recovery, time is of the essence. There are strict time limits in which debts can be recovered. Generally, debt is recoverable for a period of 6 years since the debt arose but other time limits can also apply. Calculating the precise time can be difficult and so it is important to seek legal advice if you are unsure. Legal advisors can also aid you in navigating the best strategy of debt recovery for you and your situation.
What Debt Recovery Strategies Can I Pursue?
There are two common methods of debt recovery available to creditors – letter of demand and statutory demands – and its import to seek legal advice before taking any action. While both methods can be effective in recovering debts, it is crucial to understand the legal requirements and potential risks associated with each approach. By following the right process and seeking professional advice, you can increase your chances of successful debt recovery and avoid any unnecessary legal complications.
Debt Recovery Option #1: A Letter of Demand
A letter of demand is a common initial step to take when navigating debt recovery prior to commencing court proceedings.
While it sounds relatively straight forward and it may be tempting to draft your own letter of demand to save on legal costs, it is strongly recommended that you engage a lawyer experienced in litigation and dispute resolution well in advance of sending any formal demands to your debtor. While an effectively written letter of demand usually has the desired effect, debt recovery is inherently unpredictable so acting precipitously and/or inconsistent with your future ‘case-theory’ could negatively impact your prospects in recovering the debt through litigation later if the initial demand is not successful. Plus, nothing says ‘urgent’ like a letter on a law firm’s letterhead!
Debt Recovery Option #2: Statutory Demands
If you are owed money by a company, then you may consider issuing a statutory demand. To do so, the debt in question must be:
- A liquidated debt of $4,000 or more; and
- Due and payable (ie: the time for payment has passed); and
- There must be no ‘genuine dispute’ as to the existence of the debt.
Once served with a statutory demand, the debtor company will have 21 days to either pay the outstanding debt or file an application with the court to have the demand set aside. If neither action is taken, the company will be presumed insolvent, and you can file an application with the court to have the company wound up.
In some circumstances, issuing a compliant statutory demand can be a commercial and effective means to recover your debt. However, there are strict rules to follow to avoid exposing you to any unnecessary litigation.
If you wish the find out more about debt recovery as a creditor, please contact us on 07 5443 9988 email us at [email protected], or complete our contact form.
