Owed Money by a Customer? Here’s What You Can Do
Where a customer has not complied with the terms on which goods or services have been provided, in that they have failed to make payment/payments as and when required or despite repeated requests, it can often be of assistance for a demand letter to be sent by a lawyer.
Recovery options include:
- sending a letter of demand through Bell Partners Legal seeking payment within a defined period of time;
- a follow up demand letter may be required, threatening further recovery action;
- if payment is not received as requested, the following steps may be available depending on the size of the debt and the type of debtor:
- For a company that owes the debt – if the debt is greater than $2,000 and is not in dispute, a Creditor’s Statutory Demand can be issued under the Corporations Act.
The company then has 21 days to pay the debt or reach a satisfactory deal for payment of the debt, failing which the company is presumed at law to be insolvent and can be wound up on application by you as the creditor;
- If an individual or partnership owes the debt, the debt is over $5,000 and the debt is the subject of a judgment of a court, the issue of a Bankruptcy Notice.
A Bankruptcy Notice provides for payment of the debt or a satisfactory arrangement for payment of the debt to be made within 21 days, failing which an act of bankruptcy has been committed entitling the creditor to commence proceedings for a bankruptcy/sequestration order;
- Commencing proceedings for recovery of the debt will be generally required in relation to individual debtors, more complex matters or debts in respect of which the existence or amount of the debt is in dispute;
- Options for enforcement of judgments also include garnishee orders, writs of execution of property (where the Sheriff sells personal property, land etc to discharge the debt).
If you have any debtors that do not respond to repeated requests for payment, it may be that a letter of demand or other appropriate action from Bell Partners Legal can assist in obtaining payment or enforcing any other contractual right.
For more information, please call Michael Tzirtzilakis , Head of Commercial Law at Bell Partners Legal, on (02) 9249 7600 or email email@example.com