METHODS OF RECOVERING A DEBT PART 2
Hiring a debt collection agency can be a fast and efficient way to recover debts from a client. As is the procedure, the professional will then send the Letter of Demand and recommend the debtor to complete the full payment within a given deadline, which is up to 21 days. The debt collector may issue Summons and seek a Judgement Order if the Letter of Demand is not complied with.
Followed by the Letter of Demand legal action may be taken by filing a Statutory Demand. A Statutory Demand can only be issued to a debtor if the total amount owed exceeds $2,000. There should also not be a genuine dispute about the existence of the debt between the parties, but especially if the debt is based on a court judgment, there is an automatic presumption that there is no dispute as to the existence.
The Courts have stated that businesses, which come forward with Statutory Demands, must ensure the demand is expressed in clear, correct and unambiguous terms. The demand must be committed in writing, in the prescribed form and accompanied by an affidavit that would verify the debt is due and outstanding. The Statutory Demand must be served to the debtor’s registered address, or a copy of the document may be sent personally to a director of the company. The debtor then has 21 days from the date of having received the demand, to either pay the owed amount or make an application to set aside the Statutory Demand.
If the debtor fails to comply with a Statutory Demand or have the demand set aside, a presumption can be made that the debtor’s company is insolvent. A creditor can then proceed to issue a Winding Up Application to liquidate the debtor’s company, which will then become public information.