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Debt & Risk Management


When to do it yourself?
General Principles
Flowchart
Letter of Demand
Form 1A
Payment of debt by installments
Summons Form
If Debtor doesn't defend the summons
Conference/Trial
Investigation Summons
or Warrant for Sale

 

LEGAL SERVICES - DEBT & RISK MANAGEMENT

DIY Guide for Collecting Small Debts

Why do we give away this DIY Guide?

Why have we given away this kit rather than persuading you to come to us for collecting your small debts?

As you will see, collecting small debts is often not very challenging. We realised that some of our clients would rather spend a bit of their own time to chase these debts themselves if they could, and save money on lawyers or debt collection agencies. For our part, we enjoy the more challenging work and would rather be advising and assisting in areas where our services are more cost effective for our clients. So, rather than ignoring this need we decided to help our clients out with a freely available kit (and the occasional phone call when they get stuck).

commercial lawAnd yes, we do collect debts. Some of our clients would still rather pay us than do it themselves. And we collect larger and more complex debts - and find this rewarding.

Passwords

As a matter of fair play, if you are not an existing client of the firm and don't already know us, please browse through the site and especially the page describing our services and our firm's approach. We would be pleased to help you and would like you to think of us when you next need a commercial lawyer for your business.

When to do it yourself

This is a guide to collecting business debts under $6,000 in South Australia. This is the maximum amount that can usually be claimed as a Minor Civil Action (Small Claim) in your local Magistrate’s Court. The procedures for Minor Civil Actions were designed to encourage people to deal with these cases themselves without having to involve a solicitor.

There are some situations where you should seek legal advice. The lawyer can advise you if you should continue to chase the debt yourself or if it is a matter where legal assistance is recommended.

  1. If you are unsure about your legal rights (eg. if it is unclear how a contract should be interpreted).
  2. If you sold goods to the debtor and your Terms of Trade include a clause stating that until the goods are paid for that they still belong to you.
  3. If you hold a guarantee, consumer mortgage, bill of sale, debenture or other security for the debt.
  4. If the debtor is a company and there is no possibility of any dispute over the debt.
  5. If you are holding goods of the Debtor that he has not paid for yet.
  6. If the debt has any connection with building work or supplying building materials. You may be entitled to take advantage of the Workers Liens Act. This may entitle you to register a lien on the Certificate of Title of the owner of the land or it may entitle you to demand that the building owner must make his payments directly to yourself (rather than to the builder/contractor who owes you money).
  7. If the debt is owed by a tenant. You may have other rights under your lease, the Retail & Commercial Leases Act or the Residential Tenancies Act.
  8. If you have information that the Debtor is selling his Real Estate, business or other important assets or is about to flee South Australia.
  9. If the debt exceeds $6,000.
  10. If the debt is for an uncertain amount (eg. personal injury, car accident, compensation etc.)
  11. If the debt concerns an employer/employee relationship.

How to use this guide

  1. There are some general principles that you should follow.
  2. I have set out a flow chart for easy reference to see the sequence of steps you need to take (and to move about easily through the guide)
  3. I suggest that you issue a Letter of Demand or a Form 1A Demand as your first step.
  4. If you are prepared to accept payment of the debt by installments then there is a form that you can use.
  5. There are step-by-step instructions on filling out a Summons Form.
  6. I explain what you should do if the Debtor does not defend the Summons issued against him.
  7. If the Debtor contests your claim then you will need to prepare yourself for either a Conference or a Trial.
  8. Once you have a Judgment against a Defendant, you may still have to take more steps to enforce the Judgment and to get the money out of their pocket and into your own. I provide instructions on using an Investigation Summons and a Warrant for Sale.

We would be pleased to receive comments or suggestions about this Guide.
 

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