Recovery of judgment and non judgment debts

Debt recovery process in Australia is somewhat technical and complex. Because of that, in most cases, that is done by lawyers specialising in this area of law.

Most people assume that once a court order has been issued that is the end of their process. Practice however, is sometimes different, as debtors may, for various reasons, fail to pay the judgment debt when due. One of the reasons for this is because Australian courts do not have a mechanism to enforce their own judgments, but enforcement of same is left to the judgment creditor.

Recovery of judgment debts

Judgment debt recovery is also a part of the Court process, although in most cases faster and cheaper than the Court process which led to obtaining the judgment. Enforcement creditors in consultation with their lawyers should decide on the best and commercially most viable way to enforce the judgment. Costs of same are usually recoverable from the debtor. However, the amount that can be recovered may be limited to some extent.

Whatever the case may be, the debt recovery in most cases is successful and worthwhile. Some of main factors affecting the process are:

  • Debtors’ (financial) ability to repay the debt;
  • Whether the Enforcement creditor has obtained legal assistance; and
  • Capability of the Enforcement Creditor’s legal representative.

All three things can be equally important. Unfortunately, many professional service providers do not use experienced professionals for debt recoveries, overlooking the most important requirement for a successful debt recovery professional, which is experience. Timely and decisive debt recovery action is often crucial, regardless whether or not they are judgment or non-judgment debts.

Debt recovery against companies

Debt recovery against companies is in most cases different to debt recoveries against individuals. Process is somewhat different and a solicitor undertaking the debt recovery must be aware of relevant laws that apply. This is because even a small mistake may be costly to his/her clients. Of course, if everything is done properly and other relevant things fall into place, the process can be very cost and time effective.

Thus, recently we managed to recover circa $40,000.00 from a company, for our client. The sum had been outstanding since mid 2013. Until the client engaged us, the debtor company had been promising to pay, but never made any payments. The whole process lasted just over two months, but the first payment was made within the first month. Our client’s total legal costs were only about $1,000.00. In this instance, we firstly assisted the client to create an appropriate basis for debt recovery, which then resulted in timely and costs effective recovery of the money owed.

The same client had another company which had owed our client money for years. In this instance we were engaged too late, because the debtor company had already been wound up and all of its assets sold. Therefore, it is very important that debt recovery is done as soon as possible. Another thing that creditors need to be aware of is that in Australia there is a time limitation to debt recovery actions. In most states that is 6 years from the date the cause of action arouse.

For more information please contact our debt recovery team:

p:  +61 2 6206 1300 | e:  Info@elringtons.com.au