Penrose Lawyers

Debt Recovery

Do you need help with a debt recovery claim in NSW?

One of the most frustrating things that your NSW business can face is unpaid bills. When clients refuse to pay for the services or products you provide, it can seriously affect your cash flow and bottom line.

Chasing debts owed to you is time consuming and stressful, and can become quite complex. While it can be tempting to let debts ride and hope that debtors pay up, the reality is that some debtors will only respond if you enlist the help of a debt recovery lawyer and threaten them with legal action.

Even if you don’t have a debt recovery claim at the moment, there are many things you can do to protect yourself against bad debtors in the future. These include risk mitigation strategies around extending credit to customers, enforceable contract terms and proactive debt collection procedures.

What do I need to do to recover debts owed to me?

If a client or customer is refusing to pay your NSW business the debt they owe, you will need to begin a debt enforcement process.

The process varies depending on the size of the debt, whether there are multiple debts and whether the debt relates to a business or personal liability.

The first step is to send a letter of demand to the debtor. This informs them that a debt recovery lawyer has been instructed and legal proceedings will follow if the debt is not settled. Often, this is enough to get the debtor to pay up.

If it is not, the next step is to file a Statement of Claim in the appropriate NSW court. The size of the debt will determine which court hears the claim.

If the debtor files a defence, the matter will proceed to a hearing. If they do not, you can apply for a default judgement.

Once the judge has made an order for the payment of the debt (known as a ‘judgement debt’), you can apply for further enforcement. This may include a court order, writ or bankruptcy proceedings.

Once the contracts are exchanged, they are legally binding on both parties. If you are the buyer, you will give the seller’s representative a cheque for the deposit, which will be held on trust until settlement.

Rates and taxes already paid on the property will be adjusted between the parties so that you only pay for the portion incurred while you are the owner, and a settlement statement prepared.

If you are selling a property with a mortgage on it, it needs to be discharged prior to the sale. If you are buying the property and are taking out a home loan, your lender needs to make funds available prior to or at settlement. Both parties need to liaise with their lenders to ensure that funds are made available and received to allow settlement to go through.

How can Penrose Lawyers
help with my debt recovery claim?

We believe that the best cure for bad debts is prevention. That’s why Penrose Lawyers’ debt recovery lawyers help NSW business clients with strategies to minimise the risk of a debt recovery claim. These include:

  • Credit limits and assessments of your customers’ creditworthiness.
  • Special payment terms.
  • Contract drafting and advice to ensure that your terms and conditions are enforceable.
  • Advice on your debt collection procedures.

Sometimes, however, you do need to pursue a debtor. At Penrose Lawyers, we are experienced in every stage of the NSW debt recovery process, including:

  • Preparing a letter of demand
  • Drafting a statement of claim
  • Drafting various court orders including garnishee orders (which require a third party to repay the debt) or seizure of goods to sell in order to repay the debt
  • Applying for bankruptcy proceedings or winding up proceedings
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