Debt Recovery post-COVID.
Released 01, February 2021
The effects of the pandemic on businesses across Australia are well documented. Many have suffered quite badly: for some unfortunate ones, it has meant permanent closure. Households have also suffered and though we have all done the best we can to hold on and get through the economic decline, debt has continued to rise.
Reports back in 2020 quoted record debt piles for Australia. No doubt other countries are suffering the same fate and despite the good old Australian grit and our ‘never give up’ attitude, recovery is not yet in sight. Based on political and academic rhetoric, it is fair to assume it may take some time to stabilize.
In 2020, changes were made to the Corporations Act 2001 (Cth), as well as the Bankruptcy Act 1996 (Cth), to lessen the downward pressure of the economy. Essentially, limits were changed on the issuance of Statutory Demands to companies and the amount for which an individual could be made bankrupt. The response time was also changed from 21 days to 6 months.
Though this was a legitimate move by the Government to assist, conversely, some have used the change to exploit and prolong their payment responsibilities. The outcome of the changes has meant many businesses and individuals are now owed money and for some, these are considerable amounts. The ability to recover these debts have been significantly delayed.
What now and when will this change?
In October 2020, the provisions made to the above Acts were reversed back to their prior state but what does this mean for clients?
As per legislation changes in January 2021, this means that a business can now be issued with a Statutory Demand for debts from $2,000.00 (not $20,000.00), and individuals can now be served with a Bankruptcy Notice for debts over $10,000.00 (and not $20,000.00). Moreover, a Debtor now has only 21-days to respond and no longer has the benefit of 6-months.
So, what are the options?
Clients don’t often know what can be done to assist with debt recovery and collection. Put bluntly, outstanding and unpaid debt is like an incurable disease to a business. It eats away at every aspect of the company framework because debt recovery can be challenging, damaging to productivity, and lengthy. I have not met one business-owner in over 30 years of consultancy tell me debt recovery is simple but there are means and ways to make the process that little easier – in time and in cost.
Factors such as the amount of outstanding debt, age of debt, prior recovery efforts and overall circumstances of the situation, will all dictate the potential outcome of a successful debt recovery process. A client has the options to engage a Lawyer to:
- Issue a Letter of Demand (from a Law Firm, this tells the Debtor you are more than serious when it comes to recovering payment and costs).
- Issue a Creditors Statutory Demand.
- Issue a Bankruptcy Notice.
- Commence and manage court proceedings.
Depending on the factors, a combination of the above may be required.
Commencing action is a positive move but a recent conversation with a Client reminded me of the troubling thought processes one goes through when considering debt recovery services; and it invariably contains questions regarding the cost. Well, the better question to ask is what is the cost of not acting?
How can Harbourside Legal help with your Debt Recovery?
The pandemic has created significant challenges. Some businesses and individuals will perhaps never see or experienced ‘normal’ again, but this need not be to the advantages of some who have used the pandemic, and the Government moratorium, to gain glory over others. The truth is, for those who have taken advantage, their days are numbered, and payment is now required!
If you or your business is owed money, you can now have the assistance of a leading Debt Recovery Lawyer to help you collect your money; at a price that won’t break the bank. Using the services of a Lawyer will not only help you recover the debt but may also enable you to position your company stronger and ready for growth. The end of the pandemic will come, and you and your business must be stronger than ever…recovery is on the horizon!
A Lawyer can also be your commercial confidant; a business professional infused with legal knowledge and experience. Someone each-and-every business or individual should have in their repertoire of trusted external assistance. So, don’t just focus on debt recovery services (though the main topic). Consider a free consultation to talk about:
- Employment contracts
- Reviewing trading terms and conditions
- Australian privacy requirements
- Acquisition and even exit plans.
Furthermore, consider a retention plan…they exist. Fix your fees, look at expected costs and use a Lawyer not just for debt recovery services, but someone who can assist almost every aspect of your business or debt recovery matter.
Contact Harbourside Legal Services today. Expert Commercial Lawyers for over 25-years.
Call +61 (0) 2 9955 6692 or email email@example.com
The contents of this article are considered reference only. It should not be considered legal advice of any kind and should not be relied upon. A consultation should always be had with an experienced Lawyer, before proceeding with any action.
Harbourside Legal Services Group is an award-winning law firm.