It’s never fun when you’re left holding a bad debt. The good news is that there are lots of ways you can recover outstanding debts from companies. The bad news is that there are only a few ways you can recover debts from private individuals.
Private individuals have fewer resources and more rights than companies, so getting your money back is challenging.
Before you spend your valuable time chasing a debt, we’re going to look at how you can recover private debts, and why debt collection Brisbane wide is your best resource.
Your Rights When Someone Owes You Money
In Australia, if you lend money, goods or services to someone else, you become a creditor. The person who receives your money, goods or services is your debtor.
If a debtor owes you money, they are legally obligated to repay the amount that’s owed.
Unfortunately, recovering debts isn’t always this simple. Debtors may be unable to repay their debts, or they may be unwilling. In these cases, it can be difficult to get the money you’re owed.
Your rights as a creditor mean that you have some entitlement to contact and pursue your debtor for your money. With that said, debt collection is a highly regulated field of law, and there are limitations placed on how and when you can recover money from a private individual.
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Contacting the Debtor Directly
Your first option as a creditor is to contact the debtor privately. This is a good option in cases where a debtor is willing to repay their debt, but they may have forgotten, or they may need more time to meet their obligations.
Speak with your debtor before you do anything else. In some cases, it can be a good idea to negotiate an alternative payment arrangement with the debtor. This will make it easier to recover the amount you’re owed over a longer period of time. Otherwise, you could try reducing the debt amount to encourage them to pay.
If you are having trouble getting in contact with your debtor (e.g. if you can’t find their contact details, or if they are avoiding your calls), you should be careful not to harass them. Under Australian law, you can only contact a debtor a maximum of three times per week by call, email or letter. You cannot harass them, and you shouldn’t visit their home if you have other ways to contact them.
If you can’t contact your debtor, or if you can’t negotiate an agreement, you can proceed to a letter of demand.
Issuing a Letter of Demand
Letters of demand are formal notices that an unpaid debt is due. These letters have no specific for, but they should include details about:
- The amount that’s owed
- Why the amount is owed
- When the debt is due
- A formal warning about what will happen if the debt continues to go unpaid (e.g. taking legal action)
Issuing a letter of demand may encourage the debtor to pay in order to avoid legal action. If not, the letter will form a key piece of evidence in court proceedings. It will be used to show that a debt is owed, that the debt is past due, and that you have made a reasonable effort to recover the debt without the court’s help.
A letter of demand is a serious document. They have the potential to inflame the matter or make the debtor less likely to pay. Don’t issue a demand if you have alternative ways of contacting your debtor.
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Taking the Matter to Court
If none of the above works, it may be time to take the issue to court. The court you apply to depends on the amount of money that’s involved. In Queensland, matters worth up to $25,000 are referred to the Queensland Civil and Administrative Tribunal (QCAT). Matters worth more than $25,000 are referred to the Magistrates, District or Supreme Court.
QCAT is a formal tribunal that hears minor cases for a small fee. It’s a quick and affordable way to recover small debts, though the process can still take a few months.
If QCAT finds in your favour, your debtor is legally obligated to pay the money that’s owed, even if they disagree with the ruling. If they still won’t pay, the court may issue an enforcement warrant that allows you to recover the money in other ways (e.g. by garnishing wages).
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Working with a Debt Collector
Each of the above options is an effective way to recover an outstanding debt from a private individual. The only problem is that each of these things takes time, money and legal know-how.
Debt recovery has previously been known as a shady business. As a result, the Australian Government places tight restrictions on how, why and when debts can be recovered. If you aren’t an industry expert, you should consider working with a debt collector.
Debt collectors do more than simply buying debt for a fraction of its value. They also serve as consultants and support staff for large debt matters.
If a private individual owes you money, a debt collector can devise a plan of action and take the legwork out of pursuing the debt. They’ll be able to ethically and legally recover your money. And, if it comes to it, they can also provide support and representation during court proceedings.
For medium to large debts, working with a debt collector is a cost and time-efficient way to get your money back without running afoul of the law.