It involves multiple legal steps in the process including the following:
- Establishing first contact with the Debtor, usually by sending initial Letter of Demand;
- Providing options to the Debtor to negotiate, resolve and settle the matter;
- Entering into formal dispute, resolution or Mediation process for settlement of the matter with the Debtor;
- Taking legal action through the relevant Courts or VCAT.
Steps in the debt collecting and debt recovery process:
Our client Creditor to send a final reminder letter to the Debtor
We recommend that our client Creditor forward a final reminder letter to the Debtor advising that unless the amount is paid in full, that Lawyers will be instructed within seven (7) days, unless the debt is paid in full or appropriate arrangements are made for the payment of the debt by weekly, fortnightly or monthly instalments.
Issuing a Lawyer’s Letter of Demand to the Debtor
Velos & Velos Lawyers are able to obtain instructions in the event that a Debtor has not paid the debt within seven (7) days or has not made appropriate arrangements for instalment payments.
We are able to issue the Lawyer’s letter of demand usually for the debt to be paid within seven (7) to fourteen (14) days, depending on instructions, and demand that the Debtor makes formal contact with our office for the payment of the debt within the time allowed or make appropriate arrangements for the debt to be paid by instalments, and where appropriate, a Deed of Settlement of Terms of Settlement may be entered into so that the Debtor and the Creditor client agree on how the debt is to be paid, including Interest and Legal Costs.
If there is no response from the Debtor or if the Debtor’s response is inadequate or insufficient to meet the demand of the Creditor, we are then able to obtain instructions to commence legal proceedings against the Debtor. Velos & Velos Lawyers are able to initiate the legal procedure of issuing legal proceedings for the Creditor’s Claim together with Interest and Legal Costs by requiring that complete Instructions to Solicitor and Witness Statement in chronological order be prepared on a paragraph by paragraph basis and provided to Velos & Velos Lawyers and their Barristers for giving clear instructions for the preparation and settlement of a Statement of Claim or Points of Claim.
The settled Statement of Claim or Points of Claim will need to be filed with the appropriate Court or VCAT and served upon the Debtor. The Debtor usually has twenty-one (21) days after service within which to file a Defence and in the event that no Defence is filed, Default Judgement may be obtained and then proceed to the recovery and enforcement of the debt, together with Interest and Legal Costs pursuant to the Court Order.
In the case of VCAT, the Order will need to be uplifted and registered with Melbourne Magistrates Court for the execution and recovery process.
Debtor may file a Defence
If a Debtor files a Defence, the matter will then proceed to Court as a defended matter and a Final Hearing will be set where both parties with their Barristers and Solicitors will present their evidence and a Final Judgement will be obtained. If successful, the Debtor will have to pay the debt together with Interest and Legal Costs pursuant to the Order and Final Judgement obtained
Enforcement and recovery upon the Judgement
Once the Judgement has been made, Velos & Velos Lawyers are then able to proceed with the process of enforcement and recovery of the debt, pursuant to the Judgement and the Debtor usually has the following options:
- Pay the debt in full;
- Negotiate an acceptable agreement for the payment of the Judgement to be paid by instalments;
- Enter into Terms of Settlement or a Deed of Settlement for the payment of the debt, particularly if it is a large debt payable over a period of time with periodic instalment payments, as well as provision as to whether any additional Interest and/or Legal Costs are due and payable upon default.
Deed of Settlement or Terms of Settlement
Velos & Velos Lawyers are able to advise you in the preparation of the Deed of Settlement or Terms of Settlement whereby the parties are able to agree as to how the Judgement Debt is to be paid. This is usually done where the Debtor acknowledges that the debt is due and payable and that it is not able to be paid by way of lump sum, in which case, the Deed of Settlement or Terms of Settlement provide how the Judgement Debt is to be paid and whether it will include additional Interest or Legal Costs and provide for the event of Default and additional provisions for the security of the payment of Judgement Debt by the Debtor to the Creditor.
Events of Default in payment of a Judgement Debt
Velos & Velos Lawyers are able to take legal action in order to legally enforce and recover upon the Judgement Debt, particularly if a Debtor defaults upon the payment of the debt and the terms contained in a Deed of Settlement or Terms of Settlement.
In these circumstances the matter may need to return to Court for additional Orders and in order to secure the proper amount that is due and payable by the Debtor to the Creditor.