How to Recover Debt

Debt is a complex issue within our society many people and businesses struggle with. Recovering outstanding debts from an individual or business is painful, and even more so when you have previously had a good relationship with the debtor. You don’t want to be perceived as an antagonist, but when push comes to shove, you need the money for your own cash flow.

The reality of being owed money is typically one of frustration, but it’s important to keep your cool when chasing the debt. 

There are stringent laws that protect debtors, for example:

• You cannot say or imply that you have filed for court proceedings when you have not;
• You cannot say or imply that you are going to court when you have no intention to;
• You cannot make unreasonably repetitive attempts to contact the debtor;
• You cannot contact the debtor at unreasonable times of the day or night;
• Most importantly you cannot threaten police action if they do not pay the debt – even if you think they might be guilty of a crime.  That is blackmail and a really bad idea.

So, how can you get your money when someone has defaulted on payment?

If you have gone through your standard debt recovery process and it has not yielded results, it’s time for action. 

Step 1.

Get your ducks in a row. Make sure the paperwork is in order to prove you are owed the money in the first place. 

Step 2.

Give notice of the debt. You may have supplied the debtor with this information several times but make it official. Write a letter and call it ‘Notice of Debt’ so there can be no confusion. The notice of debt must include the amount owed, what it is owed for and provide a reasonable length of time for payment deadline. 

Step 3.

If again your efforts are fruitless and you have received no response from the debtor, it is time to up the ante.

You have three options:

a) Write it off

Nobody wants this, but it could be the least stressful/ cheapest option. Unfortunately, if your business’s T&Cs and contract are not up to scratch and fail to protect you, this scenario will likely happen again. This is where Weston Ward & Lascelles’ specialist business lawyers can help you.

b) Hire a debt recovery agency

There’s a fine line between chasing a debt and chasing clients away. Many people are uncomfortable with the reported unorthodox methods used to recover debt through agencies. In many cases, the original amount owed becomes dwarfed by the amount charged to the debtor for the debt to be serviced. If payment remains elusive, the debt recovery agency will instruct a debt recovery lawyer to start court proceedings.

c) Hire a specialist debt recovery lawyer

Sometimes receiving a letter from a lawyer is the only prompt needed for funds to be transferred from the debtor. With specialist knowledge of debt recovery law and regulations, instructing a lawyer is a reputation maintaining and relationship preserving way to recover monies owed.

Step 4.

Hire a specialist debt recovery lawyer; yes, there is no escaping the fact you will, at some stage, need to hire a lawyer. It’s up to you when you seek specialist advice, but the earlier the better. Hiring a specialist debt recovery lawyer can help you avoid court. 

No matter which court your case is heard in (a District Tribunal, the District Court, the High Court), it takes time and money to pursue a claim. Sometimes it’s the only course of action that a creditor has left, but it will mean you can finally shut the book.

If you are struggling to get debts paid, Weston Ward & Lascelles can help you – no matter at which stage of the debt recovery journey you are on. 

Whether you want to tighten the grip of your contract’s terms and conditions or need to explore the most effective and cost-efficient route for debt recovery, our specialist debt recovery lawyers can help you. Contact us today, to learn more.