how does it work?

Efficient debt collection requires that an appropriate balance to be struck between gentle persuasion and legal force!

the psychology of debt

Some debtors fail to pay because they suddenly and unexpectedly find themselves without the funds and simply need more time to pay. Others are unhappy with the product or service they obtained from you and flatly refuse to pay. Some chose the wrong product and hope to avoid the consequences of their own poor decision by leaving you to carry the debt. Some are just hopeless organisers and need a regime of payment imposed upon them. Far too many are simply unprincipled people who will do almost anything to try to wriggle out of paying you.

Many debtors will "fob off" or ignore your demands and will only take you seriously if you involve a professional third party such as a lawyer. Once you involve a professional third party some debtors realise that you are determined to obtain payment and they will begin to co-operate. Most, however, will ignore all demands and will only pay once a court order has been obtained and is being enforced. These "obstinate debtors" only pay upon enforcement of a Court order and they work on the basis that only a few of their creditors will take the matter that far. YOU need to be one of those few.

Too many creditors "write off" their unpaid debts too readily. The result is that many debtors have learned that they can avoid paying their debts by simply holding out against the normal requests and demands a creditor will make. Requests and demands are only as good as your willingness to back them up with legal action. In the past, many creditors have avoided going as far as taking legal action because they had previously been "burnt" by runaway legal costs spent chasing hopeless cases. debtcollect solves this problem because our lawyers offer low cost, recoverable, fixed deposit, contingent legal fees.


The law requires that an appropriate demand for payment be made upon a debtor before legal action can be taken. As a responsible creditor, we presume you will have made a polite inquiry of your debtor to find out why payment has not been made and that you will have some idea of the debtor's reasons for not paying. If payment is still not made to you, you should write a letter setting a specific date and time as a deadline for final payment and warning the debtor that legal action will be taken if that deadline is not met. You may include in that letter a suggestion that the debtor contact you to discuss any difficulties they may have with the debt. We presume that you will not refer an unpaid debt to debtcollect until you are satisfied that legal action needs to be taken.

Some businesses find that debtors will ignore their demands but respond to a solicitor's demand. For that reason you may wish to avail yourself of our low cost Solicitor's Notice of Final Demand. The law, however, presumes that you can and will make your own demands for payment upon the debtor and, therefore, does not allow you to claim the cost of our Notice of Final Demand from the debtor. We ask that the debtor pay it for you as a matter of honour but you have no right to insist upon them paying it.

If the debtor has "skipped" town and cannot be found from our own data base, we may suggest and arrange "skip tracing" to try and find the debtor's current whereabouts.

legal force

Once you refer a matter to us to commence immediate legal action, we will send to you by e-mail a quotation for the fees required by uthe court and the process server (these are called "disbursements"). Once you accept the quote by return e-mail, we will have our lawyers immediately prepare and file in the Court a civil action and arrange to have the papers served on the debtor. We will then invoice you for the quoted amount and require you to pay our invoice within 7 days. The document prepared, filed and served is called a Statement of Claim and it requires the debtor to not only pay the amount of the debt but also the disbursements, statutory interest (if the debt is more than $1000) and a prescribed amount of legal costs to our solicitor. From this time on, the debt is in our solicitor's hands and you should avoid dealing directly with the debtor. Your accounting system now stops and the Court's accounting system for a legal action takes over. You must no longer send regular statements to the debtor as these are likely to contradict what the Court documents are telling him.

Once served, the debtor has 28 days in which to pay the debt, make arrangements to pay it, settle the matter through negotiation or file a defence and fight the case. We will keep you informed of progress and advise you appropriately. If the debtor pays, they are required to pay the money to us and we will account to you immediately. If the debtor offers payment by instalments we will ascertain the appropriateness of such an offer with regard to the debtor's real ability to pay, we will inquire about the debtor's sources of income, savings and assets and liaise with you regarding acceptance of that offer.

If the debtor ignores the Statement of Claim, we will apply to the court for a Default Judgment and then take appropriate enforcement action to have the money legally extracted from the debtor. We do this by having the Court send the Sheriff to seize and then sell the debtor's goods through the issue of a Writ for the Levy of Property. We can also issue through the Court a Garnishee Order to seize money from the debtor's bank savings wages. We will usually also send the debtor a court document called an Examination Notice which requires him to disclose his financial situation in writing to us directly within 28 days. If he fails to do so (as most do), we can then have him summoned to appear before the Court to be questioned pursuant to an Examination Order. If he still fails to attend Court, we can arrange to have him arrested under a Warrant of Apprehension and physically brought to court to be questioned about his finances. The court will seek various minor fees and charges for different types of enforcement action which you may need to pay prior to the enforcement action being taken. In relevant cases we will advise you about commencing bankruptcy or company liquidation proceedings although we will usually only take such action in extreme cases. At each stage of the action, our solicitor is permitted by law to charge legal fees to the debtor for his work. For example, when he serves the Statement of Claim upon the debtor it will seek payment of your debt, any accrued interest, court disbursements paid by you plus a solicitors fee of up to $584.00 allowed by the Local Court for his work. If we need to proceed to judgment, he can charge the debtor further fees for the steps he takes. If he needs to take enforcement action, he will pass a further fee on to the debtor.

If the debtor fights the case he must prepare and file a Defence which sets out the details of his argument. If this happens our solicitor will obtain full particulars of the proposed defence, advise you as to the legal prospects of success and liaise with you about the commercial viability of proceeding. If the debt is in the Small Claims Division of the Local Court (debts of $10,000 or less), our solicitor will appear in court for you and attempt to win the case and recover your costs. If the matter is more complex, (usually only matters over $20,000) we will seek your instructions to hire a barrister to try and win the case for you and recover your costs (including the barrister's fee). If the debtor is able to transfer the matter to a remote Court, it may be necessary to pay extra fees to have a local solicitor appear on your behalf. In most cases, the court will order the unsuccessful debtor to repay to you all the legal costs which you incurred. Many of our clients find that, when the debt is paid at the end of a legal action, the whole process has cost them no more than the initial $60.00 fee! Many are surprised to have received interest on the debt which often off-sets our flat fee and can create a "zero cost" result.

an actual example

Our client, a company, was owed $2,500 for "goods sold and delivered" to the debtor. After making the normal telephone call and written demand, our client referred the debt to us for "immediate legal action". Within 24 hours we e-mailed our client an invoice for $265.00 being $66.00 for our fee, $166.00 for the court filing fee and $33.00 to conduct a company search against the debtor company. The client paid the money straight into our account by EFT and we then prepared and filed a Statement of Claim and paid the court its fees that same day. The Statement of Claim set out in proper legal terms the nature of the claim. It claimed the $2500 owed plus $30.00 for the company search, statutory interest which, in this case, worked out at $208.96, court fees of $166.00, service fees of $51.09 and our scale solicitor's costs of $350.40 as allowed under the Court scale of costs. The total on the "summons" was therefore $3306.45.

The Statement of Claim was served four days later. It told the debtor that he had 28 days to pay the debt, fight the case or have a Court judgment registered against him. Twenty two days later the debtor sent us a cheque in full payment made out to the client. Our solicitor immediately forwarded the cheque to the client with his bill of costs and final invoice (as required by the Legal Profession Act, 2004). His bill of costs explained how the amount of $3306.45 was made up and required the client to pay back to him his component of the cheque, namely the prescribed costs of $350.40 plus GST of $25.04 plus the service fee of $50.91 plus GST of $5.91. The client got back all the debt plus all the costs and made a "profit" of $148.96 more than he had bargained for because of our recovery of $208.96 in statutory interest (which more than off-set our $66.00 up-front administration fee). He claimed back the GST components of our fees and the court charges on his BAS. The whole thing took 27 days. If only all matters would proceed so smoothly!

Unfortunately, most debtors ignore everything until enforcement action is finally taken against them. For that reason, most matters take approximately three months to complete. Some will take even longer if the debtor absconds or uses every known device to thwart and frustrate the legal process. Our policy is to hang in there and be extremely tenacious as long as there remains a real chance of collecting. We will normally chase a matter for up to three years and, after that time, re-assess the chances of ultimate recovery. These debtors forget that the longer they delay, the more interest they have to pay you and the more it costs them in the long run. Remember, your outstanding accounts are an interest-bearing asset. Don't write them off too readily!

The debtcollect system has been developed and optimised to provide a most affordable legal service for the collection of personal and business debts in the State of N.S.W. We suggest you read the 'How Does It Work' section before reading the 'What Does It Cost' section. debtcollect is not a commercial agency so we don't charge any commission on what we collect for you.

You should make your own initial demands for payment from your debtor.

If the debt remains unpaid, you can request that we instruct our solicitors to take Immediate Legal Action or you can ask that they first send out their solicitor's Notice of Final Demand.

At debtcollect we don't mess about!