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Debt Recovery
Your options explained.
Being owed money by a debtor that can’t or won’t pay is tough enough, but the financial implications that can go with it are even tougher in the current economic climate. However, the creation of the Queensland Civil and Administrative Tribunal (“QCAT”) has provided a cost-effective means for individuals and businesses to pursue minor civil claims and debts where the amount claimed is less than $25,000.00.
QCAT, amongst other things, is designed to “encourage the early and economic resolution of disputes before the tribunal” and “ensure proceedings are conducted in an informal way that minimises cost to parties and is as quick as is consistent with achieving justice”[1]. QCAT allows people to avoid incurring the legal costs traditionally associated with pursuing minor claim in the Courts. In essence, QCAT provides a self-help mechanism for people and businesses to recover money owed to them.
However, obtaining a decision in your favour from QCAT or a Court does not guarantee the successful recovery of the amount owed by the debtor. The Rules[2] of the Court provide mechanisms for the enforcement of money Judgments (‘Money Orders’) against a debtor. Enforcement proceedings can become expensive in their own right and prior to looking at the available enforcement options, a creditor should investigate the financial position of the debtor and, in particular, what assets or income the debtor has that can be used to satisfy the Judgment amount (for example, real estate or personal property in the name of the debtor).
In pursuing the debt a Court can require a person to:
- answer questions about their financial position ( Enforcement Hearing);
- order the debtor to pay the debt on terms it considers appropriate in the circumstances;
- issue an Enforcement Warrant for the redirection of a debtor’s earnings.
- issue an Enforcement Warrant for the seizure and sale of personal property.
Another option available to the creditor, where the debtor is a person, is pursuing the debt in Bankruptcy. To do so the debt must be at least $5,000.00. A Bankruptcy Trustee is appointed to manage the debtor’s estate and the creditor may be able to recover all or part of the Judgment amount through that process. If the debtor is a company, the creditor may be entitled to serve a Statutory Demand[3] on the company pursuant to the Corporations Act 2001.
The debtor company then has 21 days in which to pay the Judgment amount[4]. If the company fails to pay the creditor, the creditor can apply to the Supreme Court to have the company wound up in liquidation. Again, the creditor may recover some or all of the Judgment amount.
There are a number of ways in which the creditor can enforce a QCAT or Court Judgment, but these will involve some time and expense. It is important that the creditor identifies any assets owned by the debtor and then obtains legal advice about the most efficient and cost effective way of pursing the debt, so as to avoid compounding the losses already sustained.
Section 4 Queensland Civil and Administrative Act 2009
[2] The Uniform Civil Procedure Rules 1999 (Qld)
[3] Pursuant to the Corporations Act 2001
[4] Statutory Demands can also be made even if there is no Judgment.
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