Debt Recovery The Letter Of Demand

By Nicholas Corr

It is important for companies and businesses to ensure that appropriate policies for debt recovery solutions and debt collection solutions are put in place. There are various internal and external avenues that a company or business can take to limit the risk of its cash flow suffering from outstanding debtors exceeding normal trading terms.

This series of articles contains general information regarding external debt recovery procedures and processes and debt collection procedures and processes. If internal attempts at recovering outstanding tax invoices from overdue debtors fail then assistance from an external debt collection law firm or debt recovery law firm may result in defaulting debtors making payment of those outstanding invoices. It is not only debt collection lawyers and debt recovery lawyers which can assist to obtain payment of overdue tax invoices. Debt collection companies or debt collection agencies can also assist to seek payment of overdue invoices.

This series of articles focuses on the role of lawyers (or barristers and solicitors) in recovering debts and collecting debts within the jurisdiction of the Magistrates Court of Victoria. The debt recovery process or the debt collection process can be divided into four main stages. The stages that may be necessary as a part of debt recovery action or debt collection action include: 1) the initial demand for payment or letter of demand; 2) the commencement of legal proceedings; 3) the obtaining of a Court Judgment or Court Order; and, 4) taking recovery action to enforce the Judgment debt.

In this article, we focus specifically on the initial demand for payment. It is often not necessary for creditors to provide too much detail to their lawyers in order for a letter of demand to be drafted. In many circumstances, it will suffice to simply provide a copy of the outstanding invoice(s) and to provide details of the amounts and dates of any payments made by the customer or client to reduce the amount outstanding. If there was a quotation, purchase order and / or standard terms and conditions relevant to the debt then copies of any such documents would also be required for the initial demand.

Although the drafting of a letter of demand can in most circumstances be completed without any substantial costs being incurred, it is important to ensure that the letter does indeed demand all amounts to which a creditor may be entitled. For example, it may be that any standard terms and conditions that apply between the parties give rise to a right to claim from the debtor costs incurred in attempts made to recover the debt. In addition, it is often the case that there is a claim that can be made to interest accrued on the debt.

In many circumstances, a letter of demand of itself will result in payment (or satisfactory arrangements for payment under an installment agreement). This may render it unnecessary to take any formal Court action. As a letter of demand is in most circumstances relatively inexpensive, it is often an appropriate means by which to procure payment of outstanding debts. If the letter of demand is ignored or if payment is not made the decision can then be made as to whether to take the next step and sue the debtor.

The size of a company or business will have a bearing upon the most suitable policies and procedures to adopt for the recovery of debts. The policies and procedures may vary depending upon whether they relate to undisputed debts or disputed debts. This series of articles focuses on undisputed debts. All businesses (whether they are small businesses, medium sized businesses or a large businesses) should take action early to prevent their normal trading debts becoming stale debts or bad debts.

Disclaimer

The facts and circumstances applicable to every client are different. The above article is not intended as, nor should it be construed as, legal advice as to the subject matter of the article. Should you have legal issues that are similar to above then you should not place any reliance on the content of this article but, instead, you should seek legal advice.

About the Author: Nicholas Corr is one of the highly experienced

Melbourne Business Lawyers

at Dalton Sundberg Corr

Lawyers Melbourne

.

Source:

isnare.com

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