Being owed money is an all too common experience for many people.
Many often find themselves in the unfortunate position where they are owed money and the other person or company has no intention or ability to pay.
It may be as simple as:
- You may have lent money to a friend, family member or acquaintance.
- You may be a small business owner trying to get paid for services you performed for a customer.
- You may have extended credit to someone on a purchase of goods.
These are all normal situations and can all be remedied within the South Australia court system provided the debt is within the time limitation of 6 years. If time is near to expiry you should contact a lawyer immediately.
The first step is to make your own demands to the debtor to see if they will make payment at all.
When chasing owed money, the inevitable question is how to get a meaningful response from the person or indeed any response at all. It is not uncommon for debtors to never respond to payment requests.
Debt recovery within the Court
Debt recovery within the Court process is different as the Court operates to compel people to respond to claims. It compels people to answer claims and attend and if they don't there may be adverse findings against them. Often the threat of legal proceedings is enough to get some response however that is not always true.
Before attending Court, you should understand what the value of the total debt is.
Understanding the total value of your debt:
If the debt is:
- under $12,000 you have a Minor Civil Claim in the Magistrates Court
- over $12,000 up to $100,000 you have a General Claim in the Magistrates Court
- over $100,000 you must pursue your claim in the District Court.
This blog will focus on debt recovery in general in the Magistrates Court.
Step 1: putting the debtor on notice
The Court rules require a claimant to give notice of their claim to the debtor which means detailing the amount of the claim and the reasons why you say the amount is payable.
This step can be actioned by writing a letter to the debtor or completing a Magistrates Court Form 1A which is an official version of a Pre-Action Notice and incurs a fee payable upon filing.
Once the notice or letter is sent to the debtor, he/she has a period of 21 days to respond before legal proceedings can be commenced.
If the debtor does not respond at all then you have a choice to make; proceed to litigation or wait.
If the debtor does respond and they wish to negotiate a payment plan you are at liberty to enter those negotiations. Such an agreement can be recorded by the Court using a Form 18 Enforceable Payment Agreement.
More likely than not however, the debt remains unpaid and legal action is necessary.
Step 2: commencing a claim
After waiting 21 days from sending the notice plus allowing five days for postage, a creditor is entitled to issues legal proceedings by filing a Minor Civil Claim or a Claim depending on the amount.
That Claim needs to be filed at the Court and served on the debtor which you can choose to do yourself or the Court will do so by postage service. It is important that if you are pursuing a company you need to understand the correct address to send the form to.
At this point, you are in the Court system and there are a number of ways the debt collection can go:
- No response at all after 21 days
You would need to file for default judgment using a Form 18. That will give you judgment for the debt however a debtor can still have that judgment set aside.
- Admittance that the money is owed
In such a case, you will need to record some form of agreement as to when and how the debt will be paid. The Court may do this or a lawyer can do this.
- Denial that the money is owed
In such a case, the Claim is defended and you need to continue in the legal proceedings.
- Defence and Counterclaim
In such a case, the debtor denials owing you the full amount and instead alleges that you owe them money for another issue arising out of the same circumstances.
If you are at one of these junctions, then it is strongly recommended to obtain legal advice now. The Court process only increases in complexity from this point and it is often daunting for someone going it alone.
Andersons Solicitors can advise you on all matters of debt recovery no matter what stage you are at. We understand that the recovery of your money is important to you and no sum is too insignificant. We tailor our advice to you and your circumstances so you best understand how to proceed in your particular situation. Contact us today.