Have you loaned money but since been struggling to be repaid? Do you know how to recover loans and other debts in Queensland?
Here’s what you should know about debt recovery when you are owed money:
1. If you are owed money, you are referred to as the creditor. The debtor is a person or entity that owes money.
2. A debt must be for a liquidated amount or sum, that is a fixed amount or an amount that is easily calculated.
3. Time is of the essence when recovering debt. 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. Other time limits also apply. Calculating the precise time can be difficult. It is important to seek legal advice if you are unsure.
4. In some instances, interest and legal costs can be claimed when enforcing your debt claim. This depends on the Court or Tribunal involved.
5. Depending on the amount claimed and the relief sought, debt can be recovered through proceedings in the Queensland Civil and Administrative Tribunal, also known as QCAT, the Magistrates, District or Supreme Court of Queensland.
Debt Recovery 101
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. In this article, we will discuss two common methods of debt recovery – letter of demand and statutory demands – and the importance of seeking 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.
- Letter of Demand
A letter of demand is a common initial step to take when requesting payment of outstanding debt 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 (ideally, Argon Law) 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!
- Statutory Demands
If you are owed money by a company, then it may consider issuing a statutory demand. To do so, the debt must be:-
- A liquidated debt of $4,000 or more;
- Due and payable (ie: the time for payment has passed); and
- There is 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 or [email protected].