Recovering a Debt

If the person or business that owes you money does not have the means to pay their debt you may be throwing good money after bad.  If you know they don’t have funds or property to sell, there may be no point in proceeding.

However, if you register legal action against your debtor and they are unable to pay at the time, your right to enforce payment of the debt remains open for six years after a judgement is obtained. Should their circumstances change during those six years you can proceed with enforcement of your judgement.

Debt Recovery
    There are 3 ways to go about recovering a debt:
  1.  Do it yourself

You can send a letter of demand advising that you will place the matter in the hands of your solicitor if the amount owed is not received within 7 days.

  1. Use a debt collection agency

A debt collector is a viable option if the amount of the debt is smaller than what your legal costs might be. A debt collector will usually charge a commission on the amount of money recovered.

  1. Use a lawyer

If you need to take your case to Court, the assistance of a debt recovery solicitor to navigate the complex nature of formal Court proceedings is invaluable. Even when an action has been awarded in your favour, enforcing the judgement can prove difficult. The legal process around debt recovery involves several steps including the preparation, filing and service of a claim and statement of claim, and preparing and filing an affidavit of service. Depending on whether the action is defended or undefended, further steps may then be involved.

Letter of Demand

When you have tried unsuccessfully to get your invoice paid and you need to take more serious action a letter of demand is sent. Often this is the final reminder letter before taking legal action.

Before writing a letter of demand, it is important to send first and second reminder letters. These can be friendlier and help you maintain your business relationship if this is important to you.

A letter of demand states how much is owed, what for and when the invoice needs to be paid. It may also include a warning that you will consider legal action if the debt is not paid by a particular date. The title ‘Letter of demand’ at the top of the page lets the hirer know you are serious about getting your money.

You can send it yourself or ask a lawyer to write it on their letterhead.  This can sometimes encourage the debt to be paid promptly. This can be a relatively inexpensive and effective way of recovering your debt.

This fact sheet is for information only. It is recommended that you get legal advice about your situation.