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Key Benefits of Hiring Debt Recovery Lawyers in Brisbane

Key Benefits of Hiring Debt Recovery Lawyers

A challenge facing most businesses is ensuring that their clients pay their invoices on time. Prudent payment is important for preventing a company’s cash flow from being negatively impacted.

Despite internal debt collection efforts, some clients may still refuse to pay their overdue invoices. When this happens, continuing to invest resources into internal debt collection may detract business owners and managers from the day-to-day operations.

Key Benefits of Hiring Debt Recovery Lawyers

Hence, how can a business owner deal with a growing list of overdue invoices?

Engaging a third-party debt collection agency may be an invaluable next step. These agencies are effective, but they are often limited to making telephone calls and issuing letters of demand. Although these methods work for most debt collection cases, they may not be always adequate in recouping the debt especially for difficult cases and old debts.

When faced with more complicated debt disputes, hiring lawyers specialising in debt collection may be your best solution in cases where traditional debt collection avenues have failed.

Here are some of the key benefits of hiring debt recovery lawyers:

1.  Expert knowledge of applicable laws

Lawyers specialising in debt recovery services necessarily have an in-depth knowledge of the laws and procedures relevant to the debt recovery process. Such knowledge enables them to:

  • properly identify issues,
  • evaluate commerciality, and subsequently
  • advise on prospects and the available or most appropriate options for debt recovery.

Lawyers can guide a business through the convoluted legal processes and represent a business at court should legal action be commenced.

2.  Updating contracts and credit applications

Poor terms and conditions (“T&Cs”) can result in missed opportunities such as claims for interest and costs incurred (costs that could be recovered from the debtor for the trouble of not paying on time), or even worse, a loss of money.

Lawyers can review and update T&Cs for contracts or credit applications of a business, promoting a more streamlined debt recovery in the future and ensure greater protection for a business by minimising its exposure to incurring “bad debt.” Updated T&Cs prepared by a lawyer may include protections such as:

  • personal guarantees,
  • real property charging clauses, and
  • debt recovery costs liability.

3.  Effective communications

Difficult clients often ignore demand letters received from a business or debt collection agency. Sending correspondence with a clear message, such as a demand letter, through a lawyer is typically taken more seriously and may be more effective at inducing payment.

The use of a debt recovery law firm’s letterhead can often bring immediate results of payment as the debtor will wish to avoid legal action and legal costs. Most debtors will agree to settle their debt when issued with a letter of demand from a law firm.

Nevertheless, should a client be non-responsive to a legal demand letter, lawyers are in a position to provide advice on the next best steps and the options available for pursuing recovery.

4.  Dynamic negotiations

While most debtors will agree to settle their debt when issued with a letter of demand, that is not always the case, and the debt collection process may progress to needing more negotiations and other debt dispute resolution methods.

Although some business owners prefer to do the negotiating themselves, complications may arise in a matter that will warrant advice from legal professionals.

Lawyers have special training to conduct commercial negotiations – both in and outside of court – and guide you from the outset of the available options and the routes that you can adopt, including whether it is commercial to pursue legal action if a letter of demand does not result in payment or negotiate for an out-of-court payment plan.

5.  Review important information in Statements of Claim

Filing proceedings may be the next step when a letter of demand fails to compel the debtor to pay. While you can potentially file proceedings yourself, you may still require a lawyer to review whether the information – such as details of the amount owed, the work or goods the money is owed for, and the date the amount was due – in the proceedings is accurate and consistent with the information contained in the letter of demand.

Lawyers are trained to read the nitty-gritty details of documents and spot inconsistencies, and such prior review can save you lots of money later as there will be less chance of disputes regarding the proceedings. Lawyers are also professionally trained to draft statutory demands, proceedings and have working knowledge of the processes, including filing fees, service fees, necessary certificates, and professional costs.

6.  Legal representation in tribunal proceedings

One example where legal representation is needed in your debt recovery case is when you serve a statutory demand and the debtor files an application to the Supreme or Federal Court for an order to set it aside. Lawyers can assess whether there is a genuine dispute that can be resolved and whether the statutory demand can genuinely be set aside.

Moreover, you will need legal representation when the debtor does not pay within the 21-day time frame indicated in the statutory demand, as by this time, you can apply to put the debtor company into liquidation – in which you can maximize debt recovery.

Bankruptcy and winding up proceedings, as well as enforcement procedures such as sheriff’s warrants and attachment of earnings, may also accompany debt recovery procedures, and these proceedings may prove to be too complicated and time-consuming for some business owners.

Lawyers can best advise you whether it is commercial to settle the debt recovery out of court or within the court processes and represent your interests in often complicated and time-consuming proceedings.

7.  Enforcing judgments.

Ensuring that enforcement procedures such as sheriff’s warrants and garnishees work to get you paid sooner may also need the work of lawyers who will finalize matters carefully and cost-effectively.

Lawyers have the know-how on issuing writs of execution; garnishee orders or appointing receivers, administrators, or mortgagees in possession. In these proceedings, as a creditor, you may need to apply for a summons for oral examination of the debtor to explain their financial situation. This remedy may be too complicated for business owners who are not adept to legal processes.

Takeaway

There are several methods to collect debt – you can do it in house, through a third-party debt collection agency, or with the help of debt recovery lawyers. There are advantages when hiring debt recovery lawyers especially when the matter is complicated or when the debt has been left uncollected for too long and the statute of limitations has started to kick in. Onboarding lawyers with their legal expertise and license to represent you in court can help improve your debt collection process and improve your business’ overall cash flow.

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