Holborn Lenhoff Massey offers debt recovery services at highly competitive rates. Our firm has years of experience in debt recovery work for individuals and businesses ranging from small amounts to large claims.
There are a number of steps in the debt recovery process. The information below is intended as a guide to explain the different steps and briefly set out what each one entails.
1. Initial Letter of Demand
Generally, the first step our firm takes in debt recovery matters is to send the debtor a formal letter of demand. The letter of demand informs the debtor that we are now acting for the creditor and briefly sets out the details of the creditor’s claim. The letter is referred to as a “letter of demand” because it demands payment within a specified period of time (often 7 – 14 days). Importantly, the letter explains that if the debtor fails to pay within that period of time, then we will commence legal proceedings against the debtor. This demand lets the debtor know that the creditor is serious about recovering the debt.
In some circumstances, the letter of demand is effective and the debtor pays the full amount within the specified time period. This saves legal expenses for our clients and the debtor does not have their credit rating affected.
2. Initiating Legal Proceedings
If the debtor fails to pay within the specified time period, the next step is to initiate legal proceedings against the debtor.
For most clients, debt recovery work is for amounts less than $75,000 and therefore is within the jurisdiction of the Magistrates Court. If the debt exceeds $75,000, the Magistrates Court does not have jurisdiction to determine the matter. For amounts exceeding $75,000, the matter would have to be determined by the District Court. Clients should note that if the amount is less than $10,000, the Magistrates Court will not allow claimants to recover legal costs from the debtor.
If the debt is less than $75,000 and the matter is to be dealt with in the Magistrates Court, we will prepare a “General Procedure Claim” which briefly sets out the details and amount of the claim. The General Procedure Claim is then lodged at the Magistrates Court.
Once the General Procedure Claim has been lodged at the Magistrates Court, a copy of the General Procedure Claim must then be served on the debtor. Once the debtor has been served with the claim, they must file a response to the claim within 14 days (21 days if the debtor is interstate).
3. Default Judgment
If the debtor fails to file a response to the claim within the specified time period, we will apply for Default Judgment against the debtor. It is called “Default Judgment” because Judgment is awarded against the debtor in default of them filing a response to the claim.
If the court is satisfied that the debtor had been served with the claim, a Registrar of the Court will award judgment against the debtor for the amount claimed plus interest and court costs. Legal costs can also be claimed if the amount claimed exceeds $10,000.
A default judgment has the same effect as any other judgment and can be enforced in a number of ways. Holborn Lenhoff Massey also offers services in enforcing judgments.
4. Pre-trial conference
If the debtor does file a response to the claim indicating that they intend to defend the full amount of the claim, the next step is to request the Court list the matter for a pre-trial conference.
A pre-trial conference is a conference between the parties to discuss the matters in dispute and to attempt to arrange a settlement of the dispute. A Registrar of the Court is present at the Pre-trial conference to assist in discussions.
If no settlement is reached, the Registrar will make orders for the filing of pleadings, discovery and witness statements. The matter then proceeds towards a trial.
4. Pre-trial conference
Holborn Lenhoff Massey is able to offer our services for debt recovery matters in the Magistrates Court at the following rates:
- $60.00 plus GST to send an initial letter of demand;
- $300.00 plus GST plus disbursements for drafting and filing a general procedure claim in the Magistrates Court (this is below the scale rate of $374.00);
- $120.00 plus GST plus disbursements for applications for entry of judgment by default if the defendant fails to file an intention to defend within the specified time period (usually 14 days after service unless service is effected interstate).
- $200.00 plus GST plus disbursements to apply for a pre-trial conference if instructed.
Apart from the items mentioned in 1, 2, 3 and 4 above, if the matter is opposed, Holborn Lenhoff Massey we will charge at the scale rate of $374.00 for senior practitioners, $253.00 per hour for junior practitioners with less than 5 years experience and $121.00 per hour for clerks or paralegals. These charges are inclusive of GST.