Australia Migration, Immigration Australia, Migrating to Australia
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Registration Number 1971 and 2748
Registered to Provide Migration Advice
MARN numbers:
0208366, 0426675, 0641256, 0742456 and 0640237
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Bad Debts

Bad debts

Avoiding bad debts

There are a number of precautionary measures you can take:

  • make sure new clients and customers provide information about their credit worthiness, including credit references, and a commercial credit check on companies;
  • make sure you are clear about the terms of supply of credit;
  • investigate the possibility of obtaining a personal guarantee from the directors of a client company;
  • follow up debts immediately they are overdue, and consider more stringent terms in the future, e.g. the supply of goods C.O.D. or prepayments before work/supply is begun;
  • get supply agreements in writing, so you have proof of agreement to the supply terms;
  • check out whether it is feasible to withhold the passing of title in equipment and materials until payment is made;
  • avoid later claims of unsatisfactory work by getting a customer to sign an agreement that the work was completed satisfactorily;
  • investigate the possibility of progress payments for ongoing contracts or work.

Debt collection

You can do this in a number of ways:

  • use a lawyer;
  • use a debt collection agency or
  • you can do it yourself - there are software programs that you can use.

If you use an agency remember to ensure that you receive progress reports about their actions and ongoing costs! Check if the agency will charge for their work if the debt is not collected.

Letter of demand

You can send a letter of demand to the debtor when it is clear that the debt is not going to be paid or is long overdue. Although you can write the letter yourself, a debtor will probably give greater credence to a letter from a solicitor.

If the letter is unsuccessful you can consider legal action, get advice about this.

Legal action

If the debt is not paid after you have sent a letter of demand, then you need to decide whether it's worth taking legal action in the courts.

Most debts can be dealt with by local courts - this depends on the amount of the debt.

First the relevant documents must be prepared.

Next, an Affidavit of Service must be filled in by the process server to swear that the documents have has been served on the debtor;

A Notice of Defence may be completed by the debtor, or if no defence is filed within a certain period you can apply for an order for the amount of the debt claimed.

If there is a defence - it's off to court. An order can be enforced by the court if the debtor fails to pay the debt (plus costs).

 

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