Getting your money back
The company you've been trading with owes you money. You try to contact the directors, but they don't return your calls or answer your letters. Your choices are to chase it up, or wave your money goodbye and write it off to experience.
Why chase it up?
What can you do to get your money back?
Enforcing a Court order
Why chase it up?
We know that it can sometimes be expensive to chase a bad debt but ...
- You might get all your money back.
- If you don't try you won't get anything.
- Even if you only get back some of the money, it's better than nothing!
- You send a message to other companies that you don't let debts slide
- You might get a Court order against the company. Some credit reference agencies list details of all Court orders and their listings are publicly available. Even if the company that owes you money disobeys the order, the company now has a stain against its name that a lot of people will find out about.
- Even if you aren't completely satisfied, you might help to stop another trusting person from getting burned as collection agencies often notify clients of court orders against individuals and companies through regular newsletters. The news will get around.
What can you do to get your money back?
You don't have to face this problem alone. There are several ways you can use the legal system to try to recover your money. Some of them are free.
1. Community legal centres
Location
Around Australia. Local Councils and Citizens Advice Bureaux can help you find out if there is a centre near you.
Services (check if the legal centre offers these features):
- Evening clinic sessions where you can obtain advice
- Writing a letter for you to send to the company demanding that they pay you the money
- Helping you to complete Court forms
- No limit on the number of times you can get advice at evening clinics
Limitations
These centres will not usually take your case any further than writing a letter of demand and helping you with Court forms. You may need to make an appointment if you want to see the same lawyer more than once as they often attend the centre on a roster basis.
Summary
A valuable service which can help a lot, especially if you don't want to try to recover the money on your own.
2. Legal Aid Commissions
Location
Each State and Territory
Services (check if your local Commission offers these services):
- Open during normal business hours
- Free information sessions and initial legal advice - check to see if you need an appointment
- Provide advice
- Prepare letters
- Help to run your Court case
Limitations
Each State/Territory has different rules about how much help these Commissions can give you. They may not be able to help if:
- The debt you are chasing is quite small
- They think your case hasn't much chance of success
- You can afford to pay for your own Court case
Summary
A service which can help you if you have a serious legal action to take that you couldn't afford to take yourself. You must first check whether you and your case fit your local Legal Aid Commission's guidelines.
3. Small Claims Tribunals and Lower Courts
Location
Tribunals are only in some places in Australia. Otherwise, unpaid debts are dealt with in the lower Courts in each State/Territory. These are called either the Magistrates Court, Local Court or Court of Requests depending on the State/Territory.
Services (check if your local Tribunal/Court offers these services):
- Give you general advice
- Help you to complete forms that you need for the claim
- Arrange for serving a summons on the person who owes you the money (this service is included in the filing fee)
- Provide you with an informal dispute settlement procedure before a magistrate. This means that a summons only needs to be issued if this procedure doesn't resolve the dispute.
Features
- These Courts/Tribunals are run less formally than other Courts (see below)
- You can conduct the case yourself - there is no need for lawyers to be involved. In some of the Tribunals, you are not allowed to use a lawyer. Although it might be better to have a lawyer act for you in the Lower Courts, you do not have to.
Limitations
- Small Claims Tribunals can only handle some cases. You must check to see if your case fits.
- There is always a limit on the amount of money which can be claimed this way.
Summary
These Tribunals/Courts can provide quick, simple solutions which are legally binding, without having to use a lawyer or deal with difficult court procedures.
4. Other Courts - County Court, District Court, Supreme Court
Location
All Australian cities and many larger towns
Features
You go to these Courts if the amount you are owed is too much for either a small claim or the lower Courts to be used
Limitations
- Procedures in these Courts are more formal and can be complicated
- Almost all cases in these courts are run by lawyers.
Summary
- You should consider using a lawyer if your case has to be heard in one of these higher Courts. It's a good idea to get legal advice before you think of taking your matter to them
- There can never be any guarantee of success in actions in either Lower Courts or other Courts.
5. Private legal advice
Location
All Australian cities and most towns - if you don't know a suitable lawyer, you can contact your local law society or law institute to obtain a list of names
Services
- Write a letter of demand
- Run your Court case from beginning to end
Features
- People who may ignore a private letter of demand tend to take notice of a letter written by a lawyer
- If you have to go to Court, the lawyer knows how to go about it
- The Court will usually order the company that owes you money to pay the lawyer's costs on a scale set by the Court. Any other costs may not be covered by the order.
Limitations
A lawyer can cost you money, especially if the Court doesn't order the company to pay your legal costs.
Summary
A lawyer can make the more complicated court cases much easier to deal with, and avoid costly mistakes. Using a lawyer can sometimes save you money, especially if you are owed a very large amount.
6. Collection agencies
Location
All Australian cities and larger towns
Services (check if the agency offers these services):
- Collect a debt for you
- Send a letter of demand
- Prepare a summons for you
- Run a Court action for you
Features
Some agencies have lawyers to draw up the summons and run the Court case for you
Limitations
- Many charge a fee
- Most will charge a commission for any money recovered, either a flat rate or a sliding scale, depending on the amount
- Preparing a summons will cost extra. The Court will only order the company to pay the cost of a summons if a lawyer prepared it. (However, not all agencies have lawyers on staff.)
Summary
Using such an agency will relieve you of the problems of pursuing debts yourself if you are prepared to forgo a percentage of the amount you are owed
Enforcing a Court order
Even if your Court proceedings are successful, and an order is made against the company which owes you money, you still have to enforce it.
This may be very difficult or even impossible, and enforcement adds to the cost of your legal action.
Why enforce the Court order?
- You don't know whether there will be a problem until you try to enforce an order
- Even if you fail, or claw back only a fraction of what you are owed, it's better than nothing
- Don't forget that most credit reference agencies list details of all Court orders, and these are publicly available
- If the Court order you obtain is a substantial judgment against individuals or a company, collection agencies will write it up in their regular client newsletters
- Your action will help keep companies honest. You can make a difference.
How to enforce a Court order
The method varies from State to State - you will need to check the procedure in your State/Territory. Typically a Court order will be enforced as follows:
- Issue a warrant through the Court. The Sheriff will serve this on the company which owes you money. If you are using a lawyer, they will arrange the warrant for you.
- The effect of the warrant is that the Sheriff has the right to seize the company's goods to the value of the Court order if the company does not pay the amount ordered by the Court. The Sheriff will make an inventory of goods to the value of the Court order, and the company will have time to pay.
- If the debt is not paid within the specified time, the Sheriff can auction these company goods to pay out the Court order.
| This is Information Sheet 0033 (INFO 0033). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. |
ASIC Website: Printed 03/18/2010
