Debt Collection Specialists | Sydney | LCollect
Debt Collection Agency | LCollect

Debt collection steps before issuing a Statutory Demand

Once you have established your reasons and likely return of money from insolvency proceedings, there are several steps that may be taken before a Statutory Demand should be issued. Please note that these steps are generalised, and you should contact us to discuss your specific circumstances and not rely on the below.


Issue a letter of demand

A letter of demand from a lawyer or a debt collection agency will often have a different result to a letter of demand issued by you. You may find that your debt gets paid removing the need to proceed any further.


Optional: Commencing Court proceedings and obtain Judgment

This is not a necessary step. Unlike a Bankruptcy notice which must be supported by a Court Judgment, a Statutory Demand does not require Judgment. You should seek advice about what is the best approach to your circumstances. Putting it generally, the existence of a Judgment Debt can remove one significant avenue of appeal to the company in default. That is, the ability to lodge a dispute. This concept will be explored further at the next stage of the process.

If you decide to commence Court proceedings, they must be commenced in the relevant court. In NSW, the Local Court has jurisdiction on claims of up to $100,000. The District Court has jurisdiction on claims up to $750,000. The Supreme Court has jurisdiction on claims over $750,000. These limits are unique to each Australian State and Territory.

Once your claim has been served and the relevant time period has elapsed, should the matter be undefended you can make an application for Default Judgment. You can find out more about this process in our resources section of the website which goes through this process for each State and Territory in Australia. Each jurisdiction has requirements for service and time periods before a Judgment application can be made.

Should your debtor complete an Instalment Order, unless you object and have reasonable grounds for the objection, you will not be able to enforce your Judgment unless the Instalment Order is broken.

Once you have Default Judgment, should you not have a complete picture of the debtors financial circumstances you can have an Examination Notice issued, followed up by an Examination Order should no response be received after the Notice. This can assist you in determining whether or not you should proceed with your intention to pursue Bankruptcy proceedings. The debtor is required to provide you with the financial position together with supporting documentation. However, it is our preference wherever possible to have obtained the debtors financial position before court proceedings are commenced.

With Default Judgment in place and no stay on your enforcement action in place, you are can issued a Statutory Demand which will be discussed in our next article.


Ensure any disputes relevant to the debt have been dealt with

If you do not obtain Judgment, you should ensure that there are no disputes about the account owed or the goods and or services you have provided. The dispute must be a genuine dispute in the eyes of a court, not simply that they refuse to pay. This concept of a genuine dispute will be explored further in another article.

What is important to note, that copies and notes of all correspondence between the company indebted and your company are kept. This can sometimes be difficult is where a senior member of your organisation is involved in conversations where disputes are raised, and these disputes are not noted or recorded. Clear processes and procedures can help to alleviate this scenario.


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