Overdue Accounts? Act NOW!

March 29, 2018    litigation lawyers
Overdue Accounts? Act NOW!

In 2014-2015, the Australian Financial Security Authority revealed a total of 28,228 personal insolvency activities. Of which, over 17,000 ended up in bankruptcies.
If a person is declared bankrupt, his or her financial affairs will go into the hands of the bankruptcy trustee.

Consequences, if you are a creditor, are that:
1. You cannot bring lawsuits against the person (debtor);
2. If you are unsecured, you join the queue with other unsecured creditors; and
3. You know you will almost have to write-off the entire overdue account as another bad debt.
It is extremely unlikely a debtor (especially those in financial troubles) would volunteer to pay your outstanding accounts.

In fact, the longer you wait, the harder it is to collect your debt. It is time consuming and not pleasant to chase for payments, and it is very likely the debtor will simply ignore you and avoid you anyway. But it has to be done, sooner than later.

This is where a formal legal demand from a law firm acting on your behalf may compel the debtor to respond to you. For general debts, there is a 6 years limitation period from when the debt is accrued before you lose your legal rights to sue. Please do not wait, ACT

Reasons to Engage a Lawyer to Recover a Debt

Reason 1: Effectiveness

A formal letter of demand on a law firm’s letterhead conveys the seriousness of non-payment and gives a real sense of urgency. It compels the debtor to do something.

Reason 2: Effectiveness

Forget about all the fancy arrangements with debt collectors, your objective is simple – recover your money. Appoint a lawyer, exercise your legal rights and get your money back.

Reason 3: Yes, still Effectiveness

Lawyers understand the court procedure and process. Good lawyers WILL help you save

Statutory Demand

What is a Statutory Demand?

A Statutory Demand is a formal demand for payment issued in accordance with the Corporations Act. There is a prescribed format which must be followed.Statutory demand can be issued if the debtor is a company and the debt owed is at least $2,000. It gives the debtor 21 days to either pay the debt or dispute the debt and apply to the Court to set aside the statutory demand.

Consequence of Non-Compliance:

If the debtor fails to comply with the statutory demand and does not challenge it, the party who issued the statutory demand can apply to the Court to wind up the debtor company.

Benefit & Risk:

Statutory demand can bring about the serious consequence of winding up a company. Key benefit is that it forces the debtor to “do something” quickly.Risk is that there are several grounds to challenge a statutory demand. If challenged

Consequences of Breach of Contract

Breach of contract MAY (but not necessarily) lead to termination of contract.
Consequences of a breach depend on whether it is a breach of a condition, warranty or intermediate term.
If the term breached is a condition of the contract, such as failure to make payment, failure to deliver goods on due date, etc, then the non-defaulting party is entitled to choose to either affirm or terminate the contract, and in any event claim for damages suffered.

If the term breached is a warranty, such as failure to promptly provide certain information, then the non-defaulting party is only able to claim damages for loss suffered, but no right to terminate the contract.
If it is an intermediate term, then the Court looks at the breach in question and determines whether it is a serious breach. It will be a serious breach if it goes to the root of the contract. In which event, the non-defaulting party can also choose to either affirm or terminate the contract.Regardless of the type of breach, the non-defaulting party is entitled to claim damages.

What are your damages? More in our next Issue.

OUR PROMOTION:

Letter of Demand is a legal demand and serves as final notice for your debtor to make payment within a stipulated time. You may include a DRAFT General Procedure Claim to the Letter of Demand for an additional fixed fee of $495.00. This adds to the seriousness of and strengthens the demand. It conveys your determination to take action, forcing the debtor to reply immediately to avoid further Court action.
Please feel free to contact our Senior Lawyer, Mrs Kim Samiotis, or our Partner, Mr Anfernee Lai, for more information.

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