Recovering your debts and getting paid
Are you owed money?
Have you lent money to a friend, family member or business acquaintance? Are you owed money for goods or services you have provided? These are just some examples of situations where people can end up owing you money. So how can you recover these debts?
Ask!
The first step is to simply ask the debtor to repay the money owed to you. There is no prescribed method of doing this. You can phone them, send them an email or write them a text or letter. My personal preference is anything in writing, so that you have a record of it for later, if necessary. Regardless of the method you choose, make sure you communicate clearly, setting out how much you are claiming and why you believe you are owed the money.
If they do not pay you or you get no response to your request for payment, then you will need to send a letter of demand.
Identify the other party
Before you can send a letter of demand (or, for that matter, start a court action), you will need to know the name and address of the person or business who owes you the money.
Make sure you have the correct legal entity against whom you wish to claim. Is it a sole trader, partnership or a company? Remember, a business name is not necessarily the name of the entity against whom you will make your claim.
Make sure you have their current contact details. If you start a court action, for example, and send the documents to the wrong address, then your claim will be delayed, it may fail and may end up costing you more money.
Letters of demand
Once you know who your claim is against, you can send a letter of demand, that is, a formal letter to the debtor asking them to pay you the money they owe. In the letter, you should describe how much is owed and why, and when it should have been repaid. It also warns the debtor that if the money is not repaid, you may start court action to recover the money they owe you and that they may be liable for the costs of that court action if you are successful.
It is much better to communicate with the person who owes you money, rather than go to court straight away. However, if you do end up in court, then the letter is evidence of you having asked for your money back and may help you recover your legal costs.
Further steps
Still no payment or response to your letter of demand? It’s time to take further action. You can attempt to negotiate with the debtor using a mediator or you can bring an action in court.
The amount of money you are owed will determine the court in which you can bring the action. For example, in South Australia, a claim for less than $12,000.00 can only be brought in the Minor Claims division of the Magistrates’ Court.
Whatever the amount, it is important that you get proper legal advice before going to court, so that you can make an informed decision about whether you have made your claim within required time limits, whether you have enough evidence or whether it’s worth the cost of going to court.
Contact Ujvari Lawyers for advice about your debt recovery options.