Sydney Debt Recovery Lawyers

Our Sydney debt recovery lawyers have experience pursuing and defending debts ranging from uncontested amounts less than $10,000.00 up to very large sums in protracted and bitterly fought debt enforcement proceedings.

To avoid unnecessary and expensive litigation, we will first identify and address any genuine dispute and seek instructions to pursue a negotiated settlement. Where legal proceedings are appropriate or unavoidable, we will litigate the matter vigorously using the most efficient and cost-effective methods in a sophisticated and strategic way.

Letters of demand

Professional debt recovery usually begins with a written demand for payment, often referred to as a “letter of demand”. Letters of demand should be sufficiently detailed to enable the debtor to identify the source of the amount claimed and to provide clarification of any dispute or reason for non-payment.

Negotiation

Where the debtor raises a legitimate challenge to the amount claimed, it is best to give real consideration to negotiating a reduced sum in settlement of the dispute. Often, in these circumstances, the best outcome will be one that neither party is happy with but which both parties “can live with”. The inevitable alternative to sensible negotiation is litigation.

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Experienced Commercial Litigation Lawyers in Sydney

Legal proceedings can be costly and stressful and should only be an avenue of last resort. It is our practice to avoid legal proceedings where possible, however, where legal proceed

Our commercial litigation lawyers provide services including:

  • preliminary advice and case appraisal
  • letters of demand
  • proceedings in the Local, District and Supreme Courts of NSW and in the NSW Civil and Administrative Tribunal including:
  • applications for preliminary discovery under Part 5 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”)
  • applications for security for costs under Part 42, Division 6 UCPR
  • drafting and filing Statements of Claim and Cross Claim, Summons, Originating Process and Defences
  • urgent applications including injunctions and freezing orders under Part 25, Division 2 UCPR
  • preparation of affidavits and expert evidence
  • applications for default judgment under Part 16 UCPR, summary disposal under Part 13 UCPR and dismissal for want of due despatch under Part 12, Division 3 UCPR, and
  • applications to set aside or vary judgments or orders under Part 36, Division 4 UCPR.

Our Sydney debt recovery lawyers will help you obtain a judgment debt

Litigation

Where negotiation fails, a creditor may commence legal proceedings seeking orders for the payment of the amount claimed, including, in most cases, legal costs and interest. If successful in the litigation, the creditor will then have a ‘judgment debt’ which is enforceable through a variety of further legal procedures and debt enforcement proceedings.

Debt enforcement

Our Sydney debt recovery lawyers will help you enforce a judgment debt
Whereas the earlier litigation was concerned with “proving” that the debtor owed the amount claimed, debt recovery legal procedures and debt enforcement proceedings are concerned with recovering money from the debtor for a debt that can no longer be disputed. This phase of the debt recovery process raises two fundamental questions for judgment creditors: How do I find out what money or assets the judgment debtor has? Does the judgment debtor have enough money or assets to pay the debt?

These questions can be particularly difficult to answer where a debtor is sophisticated and evasive or simply dishonest and determined not to pay the debt. In our experience, judgment creditors facing these difficult debtors must set themselves for “the long haul” knowing that, if the judgment debtor has the capacity to pay, the debt enforcement proceedings will eventually succeed.

Debt recovery law in NSW is centred on a range of legal processes aimed at meeting the challenges outlined above.

Those processes include:

  • examination of judgment debtors
  • writs for levy of property
  • garnishee orders for wages and garnishee orders for debts
  • applications for payment by instalment
  • statutory demands under Part 5.4, Division 2 (Section 459E) and Division 3 of the Corporations Act 2001 (Cth)

Examination of judgment debtors

Part 38 of the Uniform Civil Procedure Rules 200 (NSW) (“UCPR”) provides for the examination of a judgment debtor by the judgment creditor to obtain documents and ascertain financial and other information including:

  • the income of the judgment debtor,
  • bank account details and funds held,
  • employment details,
  • real estate and personal property,
  • debts owed to the judgment debtor by third parties, and
  • the method by which the judgment debtor proposes to pay the judgment debt.

The process of examination commences with the service (on the judgment debtor) of an ‘examination notice’ requiring the judgment debtor to provide a detailed financial statement, relevant documents and a proposal to pay. Where the judgment debtor fails to provide a sufficient response to the examination notice, the judgment creditor may obtain an ‘examination order’ requiring the judgment debtor to attend at court for questioning under oath and to provide the necessary documents. Judgment debtors who then fail to attend an examination may have a warrant issued for their arrest.

The examination of judgment debtors is a process by which judgment creditors may ascertain a debtor’s capacity to pay and the location of recoverable money and assets. For debts owed by sophisticated or cunning debtors, the examination will often require skilled analysis by lawyers, barristers or forensic accountants to make sense of documents and information often devised to obscure or hide the location of the debtor’s money or assets.

Writs for levy of property

Under Part 8, Division 2 of the Civil Procedure Act 2005 (NSW) (“CPA”) and Part 39, Divisions 1-3 of the UCPR, the court may issue a writ for the levy of property for the seizure and sale of personal property and real estate (for debts greater than $10,000.00) to satisfy a judgment debt. Writs for levy of property are executed by the Office of the Sheriff of New South Wales.

For seizure of personal property, the execution of the writ involves the attendance of Sheriff’s officers at the current address of the judgment debtor. Items that cannot be seized include personal clothing, bedroom or kitchen furniture and tools of trade (including work vehicles) that do not exceed $2,000.

The forced sale of real estate under a writ for levy pf property is a more complex process requiring registration of the writ against the title to the property and a number of mandatory steps leading to auction. Whilst this process can be time-consuming and costly, it is a powerful enforcement tool for judgment creditors and legal costs can be recovered from the sale of the property.

Garnishee orders for wages and garnishee orders for debts

Under Part 8, Division 3 CPA and Part 39, Division 4 of the UCPR, the court may issue ‘garnishee orders for wages’ and ‘garnishee orders for debts’. Garnishee orders entitle a judgment creditor to ‘intercept’ money otherwise belonging to, or owed to, the judgment debtor. These orders are often served on the judgment debtor’s bank or employer but are also particularly effective when used in relation to any commercial contract from which the debtor may be obtaining a benefit. Effective garnishee orders require quality information about the debtor and are often the result of careful analysis and questioning in the course of an examination.

Applications for payment by instalment

Under Part 37 of the UCPR, a judgment debtor may make an application to the court to pay the debt by instalments (rather than a lump sum). In considering the application, the court will look at the financial circumstances of the creditor and debtor, and the length of the period over which the instalments will eventually satisfy the debt. There is no maximum period, however, it is likely that the court will refuse applications for a payment period exceeding 18 months.

Judgment creditors need to be cautious when payment by instalment orders are sought by a judgment debtor. That is because, if the court makes an order for payment by instalments, all other debt enforcement action is stayed (paused). There may be circumstances where a judgment debtor seeks instalment orders with the ulterior motive of forcing a pause in other more effective enforcement action such as the pending forced sale of real estate.

It may also be the case that a dishonest and evasive debtor intends to use the proposed instalment period to move assets or make other financial changes before then defaulting on the instalment plan knowing that the assets are now safe. Judgment creditors concerned about these risks may make an application objecting to the proposed instalment orders.

Statutory demands

Under Part 5.4, Division 2 (Section 459E) and Division 3 of the Corporations Act 2001 (Cth), a judgment creditor may serve a ‘Statutory Demand’ for payment on a corporate judgment debtor for debts of at least $2,000.00.

Companies served with a Statutory Demand have 21 days to either pay the judgment debt or make an application to set aside the statutory demand. Companies who fail to do either of those things may be wound up on the application of the judgment creditor to the Federal Court of Australia.

The unfortunate reality for judgment creditors is that Statutory Demands are notoriously easy to set aside. The Court may set aside a Statutory Demand if there is a ‘genuine dispute’ as to the debt (Section 459H (1) (a)), the company has ‘an offsetting claim’ (Section 459H (1) (b)) or ‘for some other reason’ (Section 459J (1) (b)). If the Court does grant an application to set aside a Statutory Demand, it is likely that the judgment creditor will be ordered to pay the debtors legal costs of that application: adding salt to the wound. For that reason, judgment creditors should be cautious when pursuing recovery with a Statutory Demand.

Our Sydney debt recovery lawyers provide services including:

  • fixed fee letters of demand,
  • negotiations and mediations,
  • searches and enquiries in relation to a debtor’s credit history, default history and capacity to pay,
  • fixed fee advice and representation in debt recovery matters involving debts between $5,000.00 and $20,000.00,
  • advice and representation for creditors and debtors in debt recovery matters involving debts above $20,000.00 including contested proceedings in the Local Court, District Court and Supreme Court of NSW, and in the NSW Civil and Administrative Tribunal (NCAT),
  • advice in relation to procedures and strategies for avoiding bad debtors in the future, and
  • advice and representation for judgment creditors and judgment debtors in debt enforcement matters including:
  • applications for payment by instalment and objections to instalment applications under Part 37 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”)
  • examination of judgment debtors under Part 38 UCPR
  • writs for levy of property for seizure of personal property and forced sales of real estate under Part 8, Division 2 of the Civil Procedure Act 2005 (NSW) (“CPA”) and Part 39, Divisions 1-3 UCPR
  • garnishee orders for wages and third-party debts under Part 8, Division 3 CPA and Part 39, Division 4 UCPR
  • statutory demands and applications to set aside statutory demands under Part 5.4, Division 2 (Section 459E) and Division 3 of the Corporations Act 2001 (Cth)

Disclaimer

The information provided above is not to be taken or relied upon as legal advice and Jason Francis Commercial and Construction Lawyer will not be responsible for decisions made or acts or omissions undertaken in reliance on this information. It is information intended as a guide only. You should obtain independent legal advice in respect of any issue or query you may have after reading this information.

Liability limited by a scheme approved under Professional Standards Legislation.

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Frequently asked questions

  • How do you work?
    We offer a free 45-minute initial consultation, which is considerably longer than what most firms offer. To provide as much certainty as possible, we give clear and accurate advice regarding our preferred approach to your matter, the strengths and weaknesses of your case, and the likelihood of success in litigated matters. We require funds in trust in advance of any work that we do, we take care to match your fees to our cost estimates and we do not charge for every email, brief telephone conversation or small task.
  • How affordable are your prices?
    The affordability of our legal services begins with accurate and reliable cost estimates and efficiency achieved by skilled lawyers working quickly and leveraging technology. Beyond those factors, our hourly rates are competitive with other comparable firms. We have a genuine commitment to providing quality and value, and we work hard to minimise our clients’ expenses by resolving issues and disputes as efficiently and cost-effectively as possible.
  • What geographical areas do you service?
    We service the entire Sydney metropolitan area and we also have regional, interstate and overseas clients. We have offices for face-to-face client conferences in Cronulla, Sydney CBD and Parramatta. However, regardless of your location, we are able to provide our services by telephone and video conferencing, and cloud-based document sharing. We also often conduct face-to-face conferences with clients at their offices or place of business where it is convenient and appropriate to do so.
  • Do you prefer a particular type of client? Plaintiffs or defendants? Builders or homeowners?
    We act for all types of clients and we do not have a preference for any particular type of client. We will act for you and protect your interests with determination and sophistication regardless of whether you are suing someone or being sued.

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