Debt Collection (1) – How to collect your debt?

Have you loaned money to a good friend, to an ex-partner, or even a family member and you now realise that you will never see your hard earned money again?

Maybe you were involved in a minor car accident and the other driver had failed to pay for the damages to your car as promised.

Or perhaps instead, you paid a business for some goods, but they have not given you what you paid for in return.

We at AH2 Legal are constantly approached by clients who are facing the above mentioned scenarios and are frequently asked to help recover the money owed to them.

So what action is available to you under these circumstances? What steps can you take to get back the money you have loaned or paid?

In this article, we will be showing you the basic steps towards getting your money back:

Letter of Demand

Many people think that if you are owed money, then you must immediately issue a formal letter demanding payment from your debtor (the person or company that owes you money) and sue the debtor in Court.

Whilst sending a letter of demand is often necessary, it can also make a dispute worse and damage a business relationship. Therefore, it is always advisable to firstly talk to the debtor that owes you money in a calm and civil manner to attempt in getting your money back before jumping the gun and proceeding with legal action immediately without trying to settle the matter out of Court.

If you have tried your best in settling the matter out of Court and all of your discussions fail in producing any results or if the person or business completely ignores you, then you can consider sending out a formal letter of demand to the debtor that owes you money.

You must set out in your letter of demand the amount you are owed and asking that it be repaid within a certain time frame. You should also state clearly that if the money owed to you is not paid back within the stipulated time frame, then legal action will be taken against the debtor.

Often times, the formal letter of demand from a law firm to the debtor would result in the debtor making arrangements to pay the debt owed. It is usually taken to be a sign that you are serious about the matter and that you will likely take further legal action against the debtor if the debtor continues to withhold repayment to you.

In the event that there is no response to your letter of demand, each State and Territory has different rules about how to recover money owed to you. For example, if you live in Western Australia (WA) and the amount owed to you is less than $10,000, you can lodge a “minor debt claim” in the Magistrates Court of WA against the debtor.

Minor Case Claim

You can choose to have your claim for a debt heard in the Magistrates Court of WA as a minor case if it is for an amount up to $10,000. The aim of the minor case procedure is to help the parties to come to an agreement. If the parties  cannot or will not agree, the Court must hear the matter at a Trial and make a decision. This is only done as a last resort.

The process in minor case claims in the Magistrates Court of WA is  fairly informal and legal proceedings are not as complex as in those under a General Procedure Claim for claims of more than $10,000. All proceedings are to be held in private unless the Magistrates Court otherwise orders.

Generally, legal  representation is not allowed unless all parties and the Court agrees. As lawyers, we at AH2 Legal are unable to represent you in the Magistrates Court for a minor case claim but can assist you with the paperwork, procedure and documentation required for your minor case claim in Court.

If you require any assistance regarding any legal issues you might be facing, please do not hesitate to contact us at 08 6161 0243 to seek an obligation free consultation with one of our lawyers.