How To Collect Business Debts
How To Collect Business Debts
How To Collect Business Debts
by Jim Heath
Usually what happens next in a story like this is that you make a few angry phone calls. In
your last call, you threaten legal action. (A message that's carefully taken down by their 16year-old receptionist, because everyone else is still in that polar meeting.)
Then you crack. You've had enough! You storm down to your lawyer (if you have one -otherwise, you grab the yellow pages and pick one). There, in that comfortable chair, with
that attentive face taking it all in, you feel like you're loading shells into a cannon. They did
this, they did that! Great ammunition! Blast them, Mr Lawyer!
This takes an hour. In extreme cases, even two. Your story isn't that coherent. You haven't
brought any papers -- or not enough. Anyway, you now feel better. It's now in the hands of
your lawyer. Now they'll see! Boy, will they! No messing around with you.
Back at your office, you send copies of the papers your lawyer asked for. You get them out of
the office within an hour, and send them to the lawyer by courier. (Why wait for the post? So
slow. That might delay things a day!)
A week passes. Surely by now something dire must have happened to those guys who owe
you the money? Agitated, you phone the lawyer. His tone jars you a little. Yes, he's looked at
the papers. He suggests that he will write the debtor a letter, saying that legal action will be
taken if no cheque is paid within seven days. A little casual and slow, you think -considering those guys deserve, well, death, practically.
It takes another week before he actually sends the letter. How is this possible? Surely, there
can be nothing more urgent than your $6200? A whole week, to get a letter out? But you
don't dare resent your lawyer, your main weapon. But still, you don't feel exactly the way
you did at the beginning. A thought -- hard to repress -- keeps coming up: maybe you didn't
get a tough enough lawyer? But the idea of starting all over...
The letter goes out, and another week creaks by. Nothing. No $6200. No response. Zero.
You can't stand it! You'll hit them with a summons! Mind you, you haven't done this before,
and you picture something like a lightning bolt. It will leave them stunned, and just alive
enough to beg for mercy and write a cheque.
Actually, what you say to your lawyer is milder: "I believe that a summons would be the
logical next step. Let's hope they respond in a more positive way, so the matter will be
speedily concluded." So rational.
Several more weeks pass. Probably a month. Little by little, your lawyer informs you about
the facts of legal life. You don't get out a summons just like that. (At least, he doesn't, not
with his workload.) It's a little mysterious, anyway, this summons. You're not even exactly
sure what it... er, does.
But you're beginning to learn not to press your lawyer too hard for details and petty
information. He seems, well, unforthcoming. Sometimes you get the impression that your
case isn't the supernova at the centre of his universe.
In the end, the summons is 'served'. A clear picture, that: an unpleasant-looking individual
pounds on the door of your enemy (that's what he is now). You can visualise your enemy
opening the door, turning pale, and receiving the summons with shaking hands. The same
effect -- you think -- as a visit from Al Capone. You feel good all day.
After this event, the excitement never stops. Your lawyer lets you know that the debtor has
21 days to "file a defence" (that's what you think he said, worked up as you are). Otherwise,
you'll win the case by default!
Plenty of scope for the imagination there. Many the pleasant hour you pass, downgrading
your debtor's intelligence. His days pass dimly, you imagine, his mind consisting of some
thin, grey, moronic vapour. So stupid! He'll be enraged when you snatch that $6200 away
from him, just because he couldn't remember to file a defence! After all, you know the debtor
spends all his time in meetings, he can never find anything, and his computer is always
broken. How could someone like that ever file a defence?
Unfortunately, he does. Rather, his lawyer does. It's nothing more than a little note on an
official form that says that they intend to defend the action.
Your mood turns grim. The debtor has passed through thunderbolts and a visit from Al
Capone, and still hasn't coughed up the $6200.
Time for a conference with your lawyer. "What do we do now?" you ask. He most likely tells
you the next move is to put the matter down for trial in the Magistrates' Court. (Depending
on the background of the case, there are probably lots of other things he could do. But he is
an old hand, and knows they'd run your bill up so high you'd have a fit.)
So the case goes down for trial, in six or eight months. And you receive a Statement of
Account for Professional Services. $465, including mention of 'two attendances upon you'
and 15 'telephone attendances'. (You begin to wonder if all those phone calls you made,
asking all those questions, were a good idea.) You take comfort in recalling the lawyer said
you'll get some of your legal costs back from the debtor, providing you win the case.
Now it's hard to maintain a heroic posture for six months. Probably you don't manage it. A
week before the trial, your nerves get shaky. After all, you have no idea what you're in for.
(And you don't feel like pounding the lawyer with questions and running up another bill for
telephone attendances.) You can't shake off vivid images of trial scenes from TV dramas.
Terrible cross-examinations, everything checked and scrutinised to the dot. "How do we
know that's really your signature, Mr. Bottomley?"
Probably you cave in. Your lawyer talks to the enemy lawyer, and they suggest a
compromise: the debtor will pay you $4500 straight away, and it will all be over.
You'd be wise to take it. That way you'd end up with $4500, less the $465, less another
smaller bill for the final work by your lawyer ($120). So you'll end up with a figure that
begins with a plus sign. You don't end up owing money (an all-too-possible outcome, if you
carry on, pig-headed for victory).
But say you aren't built like that. With you, it's the principle of the thing. You did excellent
work for the guy, just what he wanted, spot on time. He doesn't deserve to get away with
this! You'll show him what stuff you're made of.
You plunge into the trial. Amazingly, the enemy defends it, with witnesses and everything.
And his lawyer actually makes you sound like you were lying about some things! At least, he
made out that what you did or said could have been interpreted another way. All this takes
two days in court.
Ah, but you win. Judgment and costs are awarded to you. At this point, the word 'costs' has
an intriguing ring. You take it to mean the enemy will have to pay the $6200, plus all the
money you'll now owe your own lawyer. (Two days in court. It doesn't bear thinking about.)
By and by, you get a bill from your lawyer for $4840. And find out you're entitled to recover
$3220 from the loser. It's what the court scale allows. So you are down quite a bit. Your legal
costs are $4840, minus the $3220 owed by the debtor, plus the old legal bill for $465...
whoops, not to forget the smaller one for $120. Altogether, you've had to fork out $2205 to
collect $6200!
Anyway, you've taught the enemy a lesson. No one can mess around with you! You'll even
go into the red, and spend lots of time and worry, to punish anyone who tries to cheat you.
Except there's one problem. When do you get your cheque from the debtor? ($3220 legal
costs, plus the $6200.) He lost, the court ruled in your favour. Surely, he now has to pay at
once?
Your lawyer explains that you have a 'judgment'. This means there's no longer any argument:
the debtor owes the $6200, as well as the legal costs the court has awarded you. But now you
have to enforce the judgment. If the debtor doesn't just hand over the money, you have a
couple of options, explains your calm lawyer. One, you can send in the sheriff and he'll seize
furniture and other assets the debtor owns. Or you can put the company into liquidation -but then any other creditors will join in and you'll have to share the spoils.
The sheriff sounds like the best idea. The debtor's computer, for example. Even if it really
was broken, it still must be worth quite a bit. And there must be lots of other stuff in that
office.
So your lawyer issues a warrant of execution, instructing the sheriff to seize assets to the
value of $9420.
Many weeks pass, then your lawyer phones to say the sheriff has reported there are no goods
to seize.
"What!" (And that's the beginning of wisdom.)
"Unfortunately," your lawyer explains, "Everything was encumbered. The computer and
everything was leased. The company didn't really own anything. There was nothing the
sheriff could seize. The company is just a shell, really. So it wouldn't do any good to put it
into liquidation either."
Result: your $6200 'sale' has cost you $5425 in legal fees.
The following chapters tell you much better ways of coping with all this.
Credit services, banks etc. that have been enquiring about him, and when.
Any writs and summonses served, and whether he has had any court judgments
against him.
* At least in August, 1990, when I'm writing this. The Privacy Amendment Bill is still smouldering in Federal
Parliament. If it ever passes in the form it's in, this might change the sort of credit information you can lay your
hands on. But I don't believe a strong form of the Bill will last long. Businesses need information on people
who apply for credit. They will get the information somehow. If businesses can't do credit checks through
someone like CRAA, then no doubt they'll find another lawful way. Find out how other businesses do it, then
do it too.
Details of directors.
So if someone who asks you for credit is in financial trouble, you'll know it before you start
doing business. You can tell him: sure, send us the $6200 and you can have the (whatever it
is). If he huffs and storms and threatens to take his business elsewhere, let him. Let one of
your competitors have the loss.
Now I realise it's easy to say, "Keep your credit tight". I know the temptations. The sales
staff are selling, selling. Maybe business isn't too good, and you really want this sale. But I
repeat: the easy way to get difficult debtors to pay is never give them credit to start with.
Money up front, or no sale.
But even if your credit checks are squeaky tight, you still won't avoid all problems. A debtor
can 'go bad' for a hundred reasons. He can be a first-rate customer for years, then something
slips. Instead of paying in 30 days, all of a sudden he drifts out to 45 or 60. Or maybe a
cheque will bounce. Or something else that's not just quite normal. This should start to ring
little bells. You should find out what the problem is. Use your credit reference agency. If that
doesn't show any ominous signs, then phone the customer. You're entitled to find out what's
happening -- you're providing the customer with credit.
The customer might say, "Accept things as they are, or we'll go somewhere else." That can
put you in a quandary. Maybe he's spending $10,000 a month and it's an account you don't
want to lose. But really, you might go for three months without getting paid. Maybe $30,000.
And if he doesn't pay in the end, it means you might have to find $300,000 in new sales to
make it up.
I urge you to get this credit checking right before you worry about the rest of the things in
this book. You can stop reading right here, and do very well for yourself if you just do that.
2. Try wearing them down with telephone calls. Phone daily, even twice a day. (Not the most
popular job for someone on your staff, but it's the only cheap way to collect small amounts.)
Don't threaten anything: instead, moan about your own cash flow, or say your accountant
wants to square up his books, or whatever sounds OK. They may pay faster than you expect:
some companies keep a log of demand calls, and after you've logged in a certain number,
you get your cheque.
3. 'Offer' to send around a courier. This often breaks through their weaker excuses and
exposes a realm of truth: they might tell you they're having temporary cash-flow problems,
and that the account will be paid within two weeks.
back." Eighty percent or more would let the person push in. The same 80% are the ones who
have trouble asking for money (from anyone -- even their own brother).
If you're honest and think you aren't a natural debt collector, take account of the fact. Hire
someone who finds it easy. This is precisely what many debt-collection agencies try to do
themselves: pick people who are psychologically right for the job. There's no point in them
hiring someone to collect debts if it takes the person half an hour to calm down each time he
phones someone.
And back to you: think of your health. If debt collection rattles you, you won't be able to
sleep at night. Is it worth it? Can you run a business that way?
You have to know how much debt-collection you can stand, then hand over the job when you
reach your threshold. That's what I do. I press debtors to a certain extent -- then just throw up
my hands and let the professionals go after them. The peace is wonderful.
Using a lawyer
As a shock tactic
YOU CAN TRY asking your lawyer to send the debtor a letter. The idea is to startle the
debtor into paying. This sometimes works.
Sometimes a lawyer is willing to write a letter that begins like this: "We act on behalf of
Minimax Circuits Pty Ltd. We are instructed that you are indebted to our client to the amount
of $1200."
And it ends something like this:
"We advise that if the sum of $1200 is not received by our office within fourteen days of the
date hereof, our client will issue proceedings against you for that sum without further notice
to you."
Your lawyer hasn't insisted on knowing what the matter is about. He (or she) just sends out a
letter. Even so, a letter like this isn't free. Make sure you know how much it's going to cost.
And weigh that against the size of the debt. And think about the psychology of the debtor: is
he used to getting letters like this? Will he just shrug?
If you want to use this technique regularly, you may be able to work out a deal with a lawyer.
A bulk rate. But usually you'll get the same kind of reaction you'd get from a doctor if you
phoned up and asked for a prescription for double-strength penicillin, without saying what
your symptoms were. He'd want you to come in and be examined first. Similarly, lawyers
didn't spend all those years in law school to be asked to write letters without getting any
background.
From the evidence I have, the success rate for a straight lawyer's letter isn't too high. (But as
one lawyer told me: "It depends on the nature of the debt and to whom it is owed. Obviously,
if the debtor thinks he has a good defence the letter will draw no instructive response...")
But if you continue to the next step, and get your lawyer to send a summons, that often does
the trick -- especially for a debt that's only a couple of thousand dollars. Your expenses have
gone up, though: there are some court costs, more lawyer's time, and the cost of getting the
summons served. Worse yet, if your lawyer insists on getting stuck into the case and finding
out what it's about, you could be up for hundreds of dollars just to get a summons served.
Remember, we're talking about trying to startle the debtor into paying. You realise it's not
economic to carry the legal process any further: the sum you're chasing is too small, or you
suspect the debtor hasn't got much money anyway. You're hoping to jolt the debtor into
issuing you a cheque (and probably put off paying someone else). Shock tactics.
If the debtor doesn't pay when he gets a summons, then -- if you wish to -- you can normally
just let the matter die. You don't have to list the action for trial.
If the debtor wants to be difficult -- or stand on some high principles -- he can list the matter
for trial himself. (But as you might imagine, this doesn't often happen.) A slight danger is
that the debtor will later apply to the court to have your action formally dismissed (for 'want
of prosecution'). This makes it extremely hard, or expensive, to sue him for the debt later, if
you discover he actually has some money. Also, the court may 'award costs' in the debtor's
favour -- so you'll get a bill for some part of the debtor's costs in getting the action dismissed.
And you have to pay it.
In short, matters are not always 100% under control, even when you only threaten legal
action. But as you'll see in the next section, if you decide to drive the legal process all the
way to the court, your steering wheel can snap off completely.
Getting to the bottom of it: why Magistrates' Court actions need to be 'cheap'
IT ALL goes back to the scale of fees in the Magistrates' Court. The court puts limits on how
much the winning side can stick the losing side for, in legal costs. There are good reasons for
this. There'd be little point in having a hierarchy of courts (Magistrates', County, and
Supreme) if all the courts handled cases of any size, and allowed similar costs.
The Magistrates' Court handles cases less than $25,000 and has a correspondingly modest
scale of allowable fees. This means that if your lawyer's bill runs over the Court scale by say
$250, you can't claim the $250 from the debtor if you win the case. You're $250 out of
pocket, no matter what.
And there's something else: if you're suing for a debt of $500 or less, you aren't allowed to
claim any of your legal fees from the loser. (Except in rare circumstances, not worth hoping
for.) The only good news is that if you lose the case, the debtor can't hit you with a bill for
part of his lawyer's fees.
To repeat: if you sue someone for $500 or less, you pay all your own lawyer's fees.
If you aren't aware of all this, your lawyer certainly is. And this is what curbs him.
Mind you, there are complicated trials in the Magistrates' Court. Sometimes it can't be
helped. There might be 10 witnesses, the trial might go on for a week -- all over a debt of just
$3500. Such a thing might happen, for example, if the debtor was getting legal aid. "Why
worry?" he might think. "My costs are all covered. What can I lose?" (Actually, if he did
lose, he'd have to pay the Court's scale costs to you. Legal aid wouldn't cover that.)
In the higher courts, the costs themselves can become a driving force. For example, a 'small'
dispute for $9000 could eventually get appealed to the Supreme Court, with costs that might
soar to twenty times that on each side. Both sides are now in so deep, it's mostly the legal
costs they're worried about. They want to win and collect the costs back from the loser. Stuff
the $9000! Just save me from my lawyer's bills!
like the GPs of Law. They'll help you whether you have a gumboil, flu, snow blindness, a
broken tibia, or something worse. These lawyers are street-smart and have developed ways
of coping with overwrought, debt-chasing clients. But they still don't 'like' these cases. Who
would?
So if you go into their offices with an orderly pile of paper, and a cool head, and a smile, and
a clear understanding of what to expect, they'll put you in a different class. They might not
mind doing it for you. And that's pretty good.
HINT: if you think you'll keep needing legal help in Magistrates' Court, year after year, a
good way to pick a lawyer is to go down to the court and watch. Some lawyers are in
Magistrates' Court every day -- it's their bread and butter. (Unlike the articled clerks, who are
there now and then, for experience.) See which lawyers seem to be winning the cases. Then
pick one who matches your style of doing things.
Another little fact of life is this: if the debtor you're chasing hasn't been to court before, the
closer you get to the trial, the more likely he is to settle. He begins to think about what is
coming. Maybe his lawyer starts to tell him how he'll be cross-examined, how he's going to
be on oath in the witness box, how the other side is going to imply that he's lying, and that
it's going to be tough. And he thinks, ooooh, I didn't realise it was going to be like this. Or
the crunch might not come until he actually appears at the court in the morning. (Many cases
get settled on the morning of the trial.)
This is probably the reason so much stuff gets settled in the pre-hearing conferences in the
County Court. It's the first time the client actually goes down to court. Not a bad system,
really -- considering that the function of the court is to resolve disputes. If the aura of the
court alone will bring people to their senses, well that's one way.
The same thing is now happening in the Magistrates' Court. Pre-hearing conferences were
introduced in 1988 and the score sheet is encouraging. For those who like data, here's what
happened in 1989, the first full year for pre-hearing conferences:*
* From computer data supplied by the Attorney General's Department, Victoria (Information Section, Courts
Management Division).
678 were settled at a pre-hearing conference with the Clerk of the Court.
162 were settled after the pre-hearing conference. The two sides thought again,
1763 were adjourned (which probably means that negotiation was inconclusive, but
we aren't given details, because the pre-hearing conferences are private).
IF YOU run a small business, you may be tempted to act like a DIY lawyer. Maybe you've
used a lawyer a couple of times to chase debtors, and the process hasn't really seemed that
hard. (Beware of that feeling -- but more on that later.)
Anyway, you've discovered the following intriguing fact: you can march down to the
Magistrates' Court and fill out a summons yourself. The clerk will help you word it. The
court fee is pretty small (remembering the size of those lawyer's bills you've had). And for
another modest fee, the court will even have the summons served for you. All this has the
same legal force as if the documents had been prepared by a team of QCs.
So far so good. The debtor has 21 days to pay up, or notify the court he intends to defend the
action. If he pays before then, well and good. Case closed. You got your money.
But let's say he doesn't pay. He puts in his notice to defend. (Even worse, his lawyer files the
notice to defend.) Now what? Let me tell you this: the possible moves open to you, and the
countermoves open to the debtor, can create more scenarios than the War Room at the
Pentagon. Anything you do, the other side can probably argue about. And anything you do
might also trip you up later.
In case you don't believe me, consider this: The Magistrates' Court Civil Procedure Rules
1989, sets out what you can do (and can't). There are 74 pages of small print, with hundreds
of topics like "Affidavit by two or more deponents" and "Time for serving interrogatories"
and "Counterclaim on stay, etc., of original proceeding."
Right behind all these rules, are 40 pages of forms. These show the correct way to set out
official documents. For example, form 4A gives all the right words and layout for a
summons. There are forms for "Witness summons for production" and "Warrant to seize
property" and "Order that person indebted or employer of judgment debtor give statement"
and every other form used in Magistrates' Court proceedings.
If that's not enough detail for you, you can pop down to the Law Book Company and buy a
copy of "Australian Civil Procedure," by Bernard C. Cairns. Five hundred and seventy-six
pages, to tie it all together for you.
I confess that I've actually read all this stuff. But I also confess that I find it hard to
remember. But perhaps I'm not the only one: in Magistrates' Court trials, the lawyers are
often the ones carrying a copy of the Rules (the cover smudged from use and no longer its
original brilliant white). The rules are complicated. That's the bad news. The rules have to be,
to make sure justice is as balanced and fair as possible in all kinds of tangled circumstances.
The good news is that the magistrates will usually be understanding if you don't have a
lawyer. If you slip up on a rule -- say you forget to file some affidavit -- the magistrate may
stop the proceedings so you can correct your mistake.
So it's possible to go right through a trial without hiring a lawyer. If you sit in at the Court
sometime, you'll see that it does happen and that someone acting for himself can win his
case.
Should you try? I'd say you probably shouldn't act without a lawyer if it comes to a trial. If
you are game to try it yourself up to that point, you may be OK. For example, you can send
the summons, wait for the debtor to announce his intention to defend, and then you can list
the action for trial. If that's all that happens, you should be OK. As the trial date approaches,
the other side may decide to settle. You'll have won, cheaply.
But as soon as anything gets at all tricky, I'd run for a lawyer. Or I'd get a lawyer the instant
you find out the debtor has one. And I'd certainly get a lawyer if the trial looks like going
ahead. If you've made any small mistakes in the statement of claim in your summons, your
lawyer can probably get them corrected -- without delaying the trial.
Why not go to trial yourself? First there are all the procedures you have to get right. You
can't just turn up on the day with 10 witnesses and a cardboard box full of papers and go in
full hog. Before that stage, the debtor may want 'discovery' (he wants to see some of your
papers), and maybe he has 'interrogatories' (he has a few questions for you). If you don't
respond, you'll be summonsed and your ignorance will cost you money.
But there's something even more crucial: you probably won't present your case to the best
advantage. And you won't find important weaknesses in the debtor's case. Remember: the
case wouldn't get to trial unless the debtor was defending himself. He might say you haven't
kept your agreement, or you never had a contract at all. Possibly he might be right. Certainly
the magistrate is going to give him the same rights to be heard that he'll give you.
But the magistrate can't help you with cross-examination. And if you cross-examine someone
yourself, it's like hunting bears by blowing pepper at them. Maybe you know that story? It
goes like this:
There was a hunter who was sure that he'd come up with a foolproof way to hunt bears: "It's
simple!" he told his friend. "You just fold a piece of paper in half, then pour some pepper in
the crease. When you see a bear, you go up to him and blow the pepper in his face. It can't
fail!"
The hunter set out to prove it. A few hours later he was back. His clothes were torn, and he
was covered with scratches and cuts.
"Hell!" said his friend, "What happened?"
There was a moan. "It was working fine... But then the bear blew first."
In a trial, questioning the debtor's witnesses is a bit like hunting bears. And if the witness
happens to be an expert at something, then you're up against a smart bear -- the sort that
might blow first. Even barristers can come unstuck when they cross-examine an expert
witness (that is, attack the testimony the expert witness has given).
If you ever feel confident about cross-examining an expert witness, then read the following
transcript -- then lie down until your feeling of confidence goes away.
The transcript is from a trial that took place in the United States. A doctor has just given
evidence saying he thinks that a cancer cure didn't work, because the patient probably didn't
have cancer in the first place. The lawyer on the opposite side now stands up to crossexamine the doctor. The lawyer needs to show that the doctor might be wrong -- that the
patient might really have had cancer. But the doctor is stubborn. Very.
Q. Doctor, before you took the stand, did you see this record, Exhibit 40, the hospital record
in this case?
A. I glanced at it for two or three minutes before I came into the courtroom but didn't have a
chance at all to look at it properly.
Q. You didn't read the entire record while upon the stand, did you?
A. No.
Q. You don't know now, then, the full contents of this hospital record?
A. I believe I have got the essential parts of it.
Q. But you don't know the full contents?
A. No.
Q. And without knowing what the full contents are, you don't know whether you have the
essential parts or not?
A. I think I know the essential facts in this story and I am prepared to answer questions on it.
Q. Now, what are the essential facts, as you conceive them, in this story?
A. (Describes certain facts.) Then a biopsy operation was performed and some tissue was
removed from this area, and I think I saw two pathological reports. In the first report the
pathologist was in doubt. He made several suggestions, and in his second report the
pathologist stated that he thought it was hemangioendothelioma.
Q. From the facts that you have given us, you have sufficient facts to make your own
diagnosis in this case?
A. No, I can't make my own diagnosis without examining the patient and examining the
slides, certainly not.
Q. Then you are not able to diagnose this case as not a case of cancer?
A. I never make a diagnosis without examining the patient.
Q. Then, Doctor, as you are here upon the stand now, you do not say that this was not a
cancer case?
A. No; I will neither say that it is not nor that it is.
Q. Then, if you don't know whether it was a cancer case or not, you don't know whether in
this case a cancer case was cured or not?
A. Not knowing whether it was a cancer or not, the cure is of no importance.
Defendant's lawyer: I will ask to have it stricken out as not responsive.
The judge: answer the question.
How would you feel about handling a witness like that? Could you have ever made him
admit, "Definitely. Yes."
OK, this is an extreme example. (And a long transcript to have in a book about debt
collection.) But the point is the debtor's witnesses may well determine who wins your case. If
you don't have the skill to bring out inconsistencies, to show how a witness is colouring the
evidence, and isn't remembering something correctly, you are handicapped.
If the debtor has a lawyer, you are really handicapped. His lawyer will go at your witnesses
hammer and tongs. (And at you too, if you give evidence.)
It seems to me that if a case is worth fighting in court, it's worth getting a lawyer.
All this complexity may seem 'unfair'. You know: "I know he owes me the money! Why all
this?" But maybe the debtor knows he doesn't owe you a penny. What then?
To keep you from killing each other, a court process has evolved that's as fair as anyone can
make it. Down the centuries, a subtle collection of rules have been built up that govern what
is allowed as evidence in court. The point of it all is to try to make sure that both parties get a
fair trial.
Some of the rules of evidence seem arbitrary -- if not strange -- unless you know the reasons
for them. It's a handicap not to know them. Why handicap yourself? Pay a lawyer to look
after you.
It's true that the magistrate will filter out 'evidence' that isn't solid. But why make things
harder? Much better to present a clean case.
NOTE: most cases for less than $5000 go to arbitration, and this is a less formal process
than a full trial. (I talk about the details shortly.) In an arbitration, it is sometimes OK to
handle things yourself -- but only if the debtor has no lawyer, and his case seems very weak.
Or even just someone who works for the partnership. But someone there owes you money.
The safe thing to do is sue everyone in sight: all the partners as a group, and each of them
individually, and also the guy you actually dealt with (if he isn't a partner and already on the
list anyway). That way you're covered. No one who might be responsible (or own something
you can seize later) can wriggle out of it. You can do it all on one summons. Later I'll give
you some examples of what can go wrong if you don't do things this way.
A company. If you are sure that you have really been dealing with a company as such, then
sue that. A company has a life of its own, legally. It's like a person who can't die, even if the
directors die (they are just replaced by other dispensable mortals). It's true that you can kill
(liquidate) a company, but you don't do it by killing the people who run it. Legally, a
company is very real. It can sue. You can sue it. The company itself can owe you money, no
matter how the people who work for it may come and go.
A trust. There are a lot of these around. For example, mine: "Viacorp Pty Ltd as trustee for
the James Heath Family Trust". Trusts usually have a trading name tacked on. In my trust, its
trading name is "J&E Copywriting." If you sold something to J&E Copywriting, and you got
no cheque, who should you sue? The answer is: that whole long name. You can tack on the
trading name too, but it doesn't matter. On the summons you might also use a few
abbreviations: "Viacorp Pty Ltd ATF James Heath Family Trust TA J&E Copywriting".
Technically, you could just sue Viacorp Pty Ltd, but that gets messy because Viacorp Pty Ltd
might be doing something in addition to acting as a trustee. It could be acting as a trustee for
several different trusts, or it could be trading in its own name -- selling used 747s, for
example. It might take a lot of sorting out in court to determine which of these trading
entities actually owed you the money. Better to be clear, if you can. It will be cheaper.
There are other wrinkles to this as well. The trustee of a trust doesn't have to be a company. It
might be two or more people, acting as trustees. For example, if my Family Trust got fed up
with Viacorp Pty Ltd as a trustee, the Family Trust could chuck out Viacorp and appoint new
trustees: my wife and her brother, say.
If all this doesn't get you worried, it should. It explains why lawyers are so careful -- right at
the beginning -- to try to pin down exactly who owes you the money. If a company is
involved, or seems to be, the lawyer will do a search at the Corporate Affairs Office to see
what the company structure is. He will also trace through and see who is behind a business
name.
Even so, it may not be clear who the debtor really is. Is it cunning Mr. Bloomhardy himself,
who bought those 500 bags of cement from you? Or was it really his company, Bloomhardy
& Foolhardy Pty Ltd? Nothing was put on paper. And your recollection of what Mr.
Bloomhardy told you, and what you told him, is getting hazy. A lawyer would probably sue
Mr Bloomhardy himself, and also sue his company. Both on the same summons. Then sort
out later which is the actual debtor -- or leave it to the magistrate, based on sworn evidence
in court.
This uncertainty can seem amusing when it happens to someone else. (Go down to court
sometime and watch the proceedings.) But beware: it's no fun at all when it's your money
and you chase the wrong debtor. Be careful.
REMINDER: in this Chapter, I'm assuming that you're handling things yourself (DIY law).
If the debtor goes into arbitration with a lawyer helping him, then I don't recommend you try
any heroics. Get your own lawyer in there. Even with a lawyer, it won't be too expensive.**
Arbitration procedures are fairly simple (which cuts legal expenses), and your case itself
must be fairly simple (otherwise the court wouldn't have allowed it into their arbitration
system in the first place). If you have a lawyer, then he'll handle the technicalities and you
won't have to worry what to do. But if it's just you against the debtor, with no lawyers, then
7.)
If you reach a settlement at the pre-hearing conference, then it becomes binding: the
Magistrate (or registrar) refers it back to the court to make a formal order.
If the debtor doesn't show up, the court will probably make a formal order that lets
you proceed as if the debtor had filed no notice of defence. You win by default.
The proceedings are entirely off the record. Even if you mess things up, and admit
something you possibly shouldn't have, it won't go against you at a later hearing. So
you can safely stand against both the debtor and his lawyer.
How to do it
THERE aren't any court rules on requesting a pre-conference hearing, and no form to fill out.
You can ask the Clerk of the Court in any way you wish, even by telephone. But I
recommend writing a simple, but tidy, letter.
First look up the number on the summons form you filled out. Then send a letter, saying
something like this:
The Clerk of the Court
Magistrates' Court
[Address]
Dear Sir
RE: No. [summons number] 199_ [fill in year]
I request a pre-hearing conference on this action, because I believe it is a matter that could
readily be resolved that way. [Or, if the case is complicated because the debtor is raising all
kinds of legal arguments, you might say this instead: "I request a pre-hearing conference on
this action, because I believe the complexity of the issues would make it desirable."]
Yours faithfully
Ned Kelly
Stage two
IF THE pre-hearing conference is granted, then prepare for it. Look up all the facts you may
want to remember, and organise your papers so you can find things if you need to. Review
everything in your mind, so you know what happened when.
Finally, before the conference, try to go in with an open mind. Be ready to negotiate, to give
away a little if you need to in order to settle the thing. Control your temper (if you're angry
about the debtor). Don't start a World War . Remember, this conference can be your cheapest,
fastest, and easiest way to get your money.
Possibly the court will beat you to it and summons you to a pre-hearing conference anyway,
before you ask them. They can do it, and sometimes they will do it. Problem solved!
Organise yourself, and go in with a flexible attitude.
TOO RIGHT. You've won your case, and got a court judgment. But you haven't got any
money yet. As I've repeatedly warned, unless you've done some checking first, you may
never get any.
By some miracle, the debtor may now pay you without any fuss. If so, that's the end of the
matter.
Usually it ain't that simple. Most people don't put off paying a debt, drag their heels right
through a court case, unless they're short of money in the first place. They dispute the bill
because they haven't got enough money to pay everyone they owe.
Even when you hold a court judgment, a debtor can be alarmingly reluctant to pay you
anything. For example, maybe you've been chasing Harry Slime and you're pretty sure he
hasn't got any cash. But you know he does have a car. Now he isn't going to sell that car to
If you're thinking, "Ah, ha! Let's do that: wind up the company, and go after the directors'
money. They have heaps." Well, it might be worth doing after you've tried other things. But
only if the company owes you a lot, and the directors are rich. There are risks: it will cost
you $2000 or more to put the company into liquidation, other creditors will share in the
plunder -- and the directors may successfully defend themselves... "Who, us? Trade when we
shouldn't have! Ridiculous. " If they have money themselves, you can bet they won't just
hand it over. They'll get some expensive legal talent on their side. Who knows, they may
even be innocent...
REMINDER: one way or another, you now have a judgment against the debtor. It doesn't
matter what process you used. You may have used a lawyer, and gone through a whole trial.
You may have got it by default, after you issued a summons yourself and the debtor didn't
defend it. You may have got it after an arbitration, where you handled everything yourself.
You may have got it when the debtor failed to show up at a pre-conference hearing.
Even if you didn't use a lawyer before, you'd better get one now. It's still all right for you to
decide the grand strategy: "I want to examine the Directors in court, about the company's
assets" or "I want to attach Harry Slime's wages" or "I want to send in the sheriff to seize
assets." But if you try to handle the paperwork and formalities yourself, you might botch it -and cost yourself time. At this stage, you aren't asking your lawyer to do anything very
complex: he's only helping you through routine forms, and giving some simple tips. Use his
experience for these things. It shouldn't cost a lot.
court.
Usually, it ain't so easy. Many things interrupt this smooth flow between warrant of
execution and money in your pocket:
1. You sent the sheriff to the wrong address.
Happens all the time. For example, if you're chasing a debt owed by a company, the Law
required you to send the original summons to the registered office of the company. This
might be a firm of accountants.
The sheriff arrives at the same address, and before he's half way through his introductory
speech, he gets told that the company he's after doesn't really work there. There's nothing to
seize. The sheriff of course can't grab just anyone's gear to pay your debt, so he goes away
and returns the warrant of execution, with an explanation about why he couldn't execute it.
It's not the sheriff's job to find the correct address of the company (or person) he's chasing.
The sheriff isn't a debt-collector. He simply obeys plain orders from the court. Go to this
address, seize goods from this person, or that company. If there's anything incorrect about the
order, then the sheriff is stymied.
This wrong-address problem happens a great deal. Remember, probably a year has gone by
since you filed the original summons. Lots of companies move in a year. (Even more
individuals move: about one million a year, in Australia.) So unless you correct the address
that appeared on the summons, it's likely to get passed through to the warrant of execution.
Lawyers offices are by no means immune from mistakes of this sort (and worse, as we'll see
in a minute).
If the sheriff is sent to the wrong address, it isn't tragic. But it costs you a bit of time, while
the warrant of execution gets corrected.
2. There's nothing to seize (or nothing WORTH seizing)
Remember that advice, way back? That there's no point going through a whole legal process,
to find the debtor has no assets or way of paying you.
A lot of the time, that's exactly what the sheriff finds. He goes to a company address and
formally seizes everything. ('Formally,' because the sheriff first seizes things 'on paper'. He
usually gives the debtor a few days to pay, and if he doesn't pay, then the goods can be taken.
Meanwhile, the debtor isn't allowed to remove the goods or sell them, without the sheriff's
permission.) But the debtor often pipes up and announces that everything is leased. And the
only valuable things are owned by the debtor personally, in his own name. The sheriff goes
ahead with the paperwork, but he knows he won't be able to get any money out of the
company. He won't be able to sell the stuff owned by the leasing company for enough to pay
the balance owing, cover the costs of the sale, and have anything left over. (Assuming the
leasing company even let the sheriff do it.) And anything that's owned by someone
personally can't be seized to cover a company debt (though the person who claims to own it
can be required to prove it.)
On the other hand, if the sheriff is chasing a debt owed by a person, then what does he find?
Not much, usually. Unless the lounge suite is new or leather, it will cost more to take it away
than it will get at auction. The sheriff won't take things that aren't worth taking. (You
wouldn't thank him, would you, for an invoice instead of a payment?) Similarly, that old
Morris 1100 will be left at the debtor's house, even if it's fully paid. (Cars have to be towed
away, and advertised, and that costs.)
If the car is worth something, but it's on hire purchase, it can't be seized. So we're down to
the TV and the video recorder. Everyone has those. Sometimes they've even been paid for.
But there's a snag: Victorian State law says that one TV and video recorder are 'necessary
household property'. The sheriff can't take them. He can take any extra TVs or video
recorders -- but he has to leave the basic survival kit of one each. Anyway, even if he gets a
TV, it isn't worth that much. You should see the rows and rows of TVs at the auctions -- put
there by sheriffs, and from repossession by cash-converters and money-lending people.
Oodles of TVs, which means they go cheaply.
In this lamentable category of 'nothing to seize' comes the all-too-common case of a husband
who runs up debts, and the wife who owns all the goods. There's nothing the sheriff can seize
from the husband, though the house may be full of Picassos and antique furniture and gold
bars. It all belongs to her -- see, here are the papers to prove she bought all this treasure.
Even if the stuff is jointly owned, the sheriff can't seize it.
3. You've been chasing the wrong person.
This happens so much it would make you weep. And it will if it happens to you.
For example, some people sue one of the partners in a partnership. Finally, a year down the
track -- after summons, judgment, warrant of execution -- the sheriff stands at the door of the
partner you sued. "I only own half of the stuff," he tells the sheriff.
You might think, "Fine. He can take half then. That should be plenty." But hold on: he means
half of everything. The sheriff can't seize (and sell), half a table, half a computer, half a filing
cabinet. So you're stuffed.
This goes back to what I was saying about making sure you're suing the right person. Make
sure you know whether the money is owed by a person, or several people (yes, you can sue
in bunches) or a company, or a trust.
4. The company has gone into liquidation
But that's incredible! How could anyone even think of suing a company after it's gone broke?
Um. Lawyers do it from time to time. You know, the process starts when the company is still
alive, and momentum carries the legal action forward, right to the end. When no one from
the debtor company shows up at court, your lawyer thinks -- "How wonderful, we win by
default."
The sheriff, in close touch with reality, eventually comes back with the awful news: the
company went into liquidation six months ago. It takes a certain skill for the lawyer to
explain this gracefully to his client. His client has 'won' but will probably get nothing. Zero.
And he's still up for his lawyer's bill.
5. The person you're chasing goes bankrupt
You can be very close to success, and have this pulled on you. The sheriff can have
everything out of the house and on the morning of the auction, he gets handed a bankruptcy
notice. This means you still have to pay the costs for removing all the goods from the house
-- and if you get anything at all, it won't be much.
living somehow. Maybe he's got a pension, or annuity, or does odd jobs for cash. You can
insist on finding out all that at a court examination. Then the court can order the debtor to
pay you a fixed amount each week. (Let's hope it isn't $3 a week, on a debt of $5000.) If he
disobeys this order -- phut! The court can put him in prison. And he still owes you the money
when he gets out.
As you see, this is all pretty grotty, end-of-the-line stuff. It takes time. It's not uplifting or
fun. The returns are often meagre. But it's where you end up, if you have to pursue a debtor
through the courts, right to the end.
By now you shouldn't need a cost-justification study to realise that it's better business to
make those boring credit checks right at the beginning. Or even get your money -- or part of
it -- in advance if you can.
address'.
Unless a private investigator holds a Mercantile Agents' Licence, he can't charge you to
collect a cheque. But he can pick up a cheque for you if the debtor offers it. It's surprising
how often this can happen.
And even the hardest 'professional debtors' -- real scumbags who keep changing their
address -- will pay promptly when one of these ex-policemen advises them that it's either
that, or the CIB. (Extreme debt cases often lapse into fraud.) No harassment, mind you, just
kindly advice.
So it's worth having the phone number for a couple of private investigators. So easy to reach,
so pleasant to use.
The other thing is they can find out if it's worth chasing a debtor. For say $50 you can find
out quite a lot. For $150 you can get a top-line report. You might discover the debtor has a
beach cottage no one knew he had. Or a boat. Or some assets in a false name.
Whatever happens, you'll get back a straight story. You'll find out what the debtor is worth,
or you'll find out he's bad news, and not worth chasing further. Very useful information,
either way. You can make a sensible decision -- a practical, unemotional, business decision.
Go for it, grab the boat. Or forget it, cut your losses.
Compare this precision -- and economy -- with the costs of blindly 'reaching for a lawyer'.
Even ordinary lawyers cost $150 an hour or more. And they can't tell you whether it's worth
chasing someone in the courts.
Common sense will tell you when you should use a private investigator. If you're chasing an
individual or small company, and you aren't sure there's any money there, then a private
investigator can be just right. But if a big company is stalling about a bill -- or maybe
genuinely disputing it -- then you need a lawyer.
Lawyers: Get paid as they go (and sometimes in advance). You pay them, no matter what
the results.
Debt collectors: Will usually negotiate hard with the debtor to try to get a settlement before
they start legal action.
Lawyers: Get stuck right into the legal process. Little negotiation, if any.
Debt collectors: Will knock on doors, phone at odd hours, and try anything legal to collect
your money.
Lawyers: The only pressure they can use is to pursue the matter through the courts.
Debt collectors: Keep pushing their lawyer hard, if it comes to legal action.
Lawyers: May seem sluggish.
Debt collectors: Pay a lot of attention to whether it's possible to collect the debt. Will
usually check to see if the debtor has assets.
Lawyers: May go ahead without worrying about such things. At best, will raise the point and
leave it to you to decide.
Debt collectors: If they need to use a lawyer, you have to pay for the lawyer, as well as pay
a commission to the debt-collection agency.
Lawyers: Lawyers fees only.
Debt collectors: Keenly interested in collecting debts, and in all aspects of it.
Lawyers: Rarely very interested.
All that may seem like a recommendation never to use a lawyer. That would be the wrong
conclusion. There are times when you should go straight to a lawyer and let him do
everything. And there are times when you should use neither a lawyer nor a debt collector.
By the time you finish this book, all these choices should be fairly clear.
For now, let's take a closer look at how debt collectors work.
Point one: there are all sorts of debt collectors.
Some are large organisations that operate at a genteel level, sending out increasingly
demanding letters, then starting legal proceedings at a certain pre-determined point. They
don't get out into the field and bang on doors.
Some middle-sized debt collectors specialise in negotiation. They adjust their approach to
the type of debtor. They do go out and see the debtor, but mainly with negotiation in mind.
Maybe the debtor can pay so much a week? Or he could make an offer that might be OK?
Anyway, what's the real reason this person hasn't paid? The debt collector wants information,
he picks up vibes, he uses his common sense and experience to find some way to make
progress. Only as a last resort does he use legal action -- and then only if he's sure there's
really money at the end of it.
Finally, there may be debt collectors who simply want to shake up the debtor, frighten or
embarrass him into paying. I honestly haven't met one like this. If a debt collector is
harassing debtors, he shouldn't be. It's illegal and the debt collector will lose his licence if
he's found out. Yet this is the image people often have of debt collectors -- thugs or demons,
like some of the creatures on the cover of this book. There are newspaper stories about
people being beaten with baseball bats because they didn't pay a debt. But if you look
closely, they owed money to criminals. And criminals have their own ways to collect. Hardly
ever by using licensed debt collectors.
Which kind of collection agency should you use?
Big collection agencies
If you run a big company, but most of your debtors are small, then a big debt-collection
agency could be right. They're simply taking over the routine work of collecting lots of little
ones. A few letters, maybe a phone call, then the threat of a summons -- to see if the debtor
scares into paying. They probably have a cheap, assembly-line method of sending out
summonses. (A lot of small debtors will pay on a summons.) What they do about the rest,
depends on how much they know about the debtors. They might just write off any that don't
pay on the summons.
Scare-tactics agency
Never use a collection agency that tries to scare people. Apart from anything else, it's not
efficient. So many people will pay -- would like to pay -- if they could figure out a way to do
it. Probably they didn't realise that they could work out a repayment scheme. Even humour
can collect a lot of debts. You really don't want a grim agency, with no flexibility,
communication skills, or diplomacy. So forget that one.
Flexible, negotiating agency
That leaves a middle-sized agency, with a lot of negotiating skill. This is a good answer if
you keep getting debts of all sizes that are hard to collect. The agency will chase the small
ones and the large ones, the easy ones and the hard ones. For them, it will all balance out.
You'll get a flexible service, and a lot of good advice. These people are easy to talk to and
really know the score. The best way to understand how they do things is to read some quotes
from the head of one of these agencies (from a tape recording I made with his permission,
over lunch one day):
"I tell our new people, you wear three hats. First, there's social welfare officer -- there's no
point taking legal action with some of these people. They've got nothing. And it won't do our
client any good. The second hat, the main one, is a negotiator. Sometimes our client has done
a bung job, so let's settle this thing. The third hat is the hard-nose collection officer. We've
got professional debtors out there. I know people around town who have furnished $400,000
houses, they've owned them, sold businesses and so on, drive around in a Mercedes, and they
don't pay people. Whoever gives them credit, is a sucker. With these types, you've got to get
down on their level and fight. You manoeuvre so they know they're up against a pretty heavy
fighter. They think, I'd better pay this one. But all the other weaker ones, I won't."
"But our policy, if we can't get any part of the money in ten days, we look into them, eyeball
their background a little bit, in order to summons them. If they've got a string of summonses
against them, totalling ten, twenty, thirty, forty grand, and our debt is $500, we're a bit
hesitant throwing our client in there, spending money, because they might waste it. The
debtor is going down fast, so what's the point? We don't want to go for legal action because
we know the ramifications.
"If it comes to a legal fight, we use a hands-on approach with our solicitor. First we get our
own bloke out to serve the summons. We'll ring up the debtor and ask him: OK, you've got
the summons. Are you going to negotiate? What's going on? If that's no good, we maybe get
a default judgment and issue a warrant of execution against goods. But we still contact the
debtor and get him involved. A lot of solicitors don't have a call-back system. They'll just
wait three months, and if the sheriff hasn't contacted them, then they might do something
about it.
"In debt collection, a lot of the time there's a defended action. We call for a summary
judgment right away. Get affidavits from our client, get a court hearing date. Knock out the
defence, because a lot of the time they don't turn up. And we get judgment, and go ahead
with a warrant of execution. Alternatively, if they come up with a defence, our solicitor gives
it to us, we read it, then we fax it to our client and discuss the matter. At that point if the
client will give a little, we may pick up the phone and say, can we settle? What about giving
a discount? And everybody pays their own costs.
"If the client says no, those bastards are so bloody wrong, we get the particulars of claim, all
that's happened. It goes to our solicitor, who draws up an affidavit and it goes off to the
defendant. And we say, there's our particulars of claim. If they aren't prepared to settle then,
we list it for trial.
"Finally the trial gets close. Our solicitor might get an offer. He'll fax it through to us. Court
hearing is Friday. He's prepared to offer such and such. Will your client accept? We talk to
the client. If so, boom. Done. As long as we have the cheque tomorrow. We cancel the court
hearing. We've done that many times.
"We keep pushing. When the sheriff serves the warrant of execution, he gives them another
five days. What often happens is he comes back and gets a big sob story. 'Give us another
couple of weeks', they say. Debtors have been able to delay the sheriff for a month or two by
promising payment. We'll ring the sheriff and ask if he's got it yet. Two weeks later, have you
got it? Give him another week. How's it going? You get much success? He might say, look
there are goods here worth about $300 and the lady said she was going down to get a loan,
and I was going to give them a bit of time. Other times, he'll say, yes, I've got the goods -- or
I've got the cheque. They've paid.*
* [ For balance, I should tell you that a sheriff who read this said he "didn't listen to debt collectors, only to
their lawyers." I found many other examples of this kind... Lawyers and court officials who weren't sure how
debt collectors work. Sheriffs who complained about the ignorance of some lawyers. Lawyers who moaned
about how long it takes the sheriff to act. Debt collectors who lashed out at lawyers... No serious contradictions,
but enough conflicts of viewpoint to add a colourful human slant on the world of debt collection. ]
"A lawyer wouldn't do that. (Some would, to a point.) We follow it up. Because we aren't
getting paid until the debt's collected. And that's the key difference. We're eager to go after
the debtor, because we want a result. Because we want to get a commission. Because we
want to show our clients we do a good job. We want them to give us more debts to collect.
"What you need with a solicitor, is someone to crack the whip. Someone who knows what
they're doing. In debt recovery, you might be up against a lawyer who's being slow -- we've
had this -- because their client told them, I want to drag this one out. Lawyers are very
reluctant to slam another lawyer straight into court for not responding. Because they're
scared of the judge turning around and saying, haven't you given this guy enough time? Say
you want to push for discovery. Your lawyer shakes in his boots. I've been told, 'No, no, I
can't do that.' I have to push him.
"I settle a lot of accounts for our clients purely on economic grounds. One just the other day:
I spoke to the guy, the client wanted three grand. There was a little bit of funny business
going on. They wanted $3000 from this debtor -- the client told us the debt was $3000, but
we'll credit them $500 because there was a bit of a dispute on the job. They acknowledged
that this guy would have a bit of a claim. So we'll accept $2500. So I went to the debtor and
he said, no way, mate. The shoddy job, they did this and this. I talked to him a bit, joked with
him -- as I said, it depends how the debtor responds, what we do. He could see the funny
side, and also the business side. He was a bit stubborn. So he said, I'll give you $1500 and
that's it. I said, you've got to be joking, mate. They've already dropped $500.
"So I came back to the client and spoke to him. He said, no, no, no, I want the $2500, but
look, if you really have to take $1500 I'll take it. But get more if you can. I went back to the
debtor, and said, look the time you're going to take off work, any sort of legal action, there's
no winners. The time and money you're going to spend on this, even though you think you're
right is going to be horrific, you're going to employ a solicitor -- you won't get all your costs
back, because the court doesn't work that way. You might get 50% of your costs back,
awarded, if you win.
"So I said, meet him halfway. $2000. And he thought about it and said, look, yeah, I can't
afford the time off work --self-employed business man. OK, I'll settle. The client was happy.
All done."
And my conversations with debt collectors were so interesting, here are some quotes
getting there...
What next?
WIDEN your attack. Become more flexible, and also much more precise. Use 'smart'
weapons. Don't send in a division of tanks, when you can get on the hot-line and talk the
debtor into surrendering.
There's a lot of detail in this little book. So a summary might be in order:
1. Tighten up your credit policy. Check on people and companies before you give them
credit. Also, get as much as you can in writing about your agreements, delivery terms, etc.
2. Before you start chasing a debtor using legal proceedings, find out if he's worth chasing.
That is, find out if you'll you get something at the end of it all.
3. Be ready to compromise and negotiate, at any stage.
4. Collect large debts by sending someone around personally. Do it yourself, if you have the
time.
5. If you still get a stream of hard-to-collect debts, then find a good debt-collection agency
and sign up with them.
6. Keep in mind what a private investigator can do for you. Sometimes the easiest way to get
a cheque is to have one of these gentlemen help you.
7. If the debtor is using a lawyer, then use a lawyer too.
8. Organise your background papers well before you see a lawyer.
9. Before your case gets to trial, get a lawyer -- whether the debtor has a lawyer or not. (In an
arbitration, it may be OK to handle things yourself, if you care to, provided the debtor
doesn't bring in a lawyer.)
10. Once your case is listed for trial or arbitration, try to get a pre-hearing conference.
Thanks to...
SOME OF the most valuable parts of this book are there because many professional people
gave me their time. Lawyers, debt collectors, a magistrate, private investigators, a creditreference association, and sheriffs. Many of them gave me long interviews, and they all read
the manuscript. (In one case, twice!) Thanks to you all, whether I'm allowed to name you or
not.
My visible thanks to:
Mr Kevin Allen, Members Services Executive, Credit Reference Association of Australia
(CRAA) Ltd
Mr Paul Cooney, W. J. Lawrence & Co. Pty. Ltd.
Mr Maurice Kerrigan, Licensed Private Detective
Of course these people aren't responsible for what I have said. Many of the opinions and
suggestions are my own. Errors are also mine, if there are any (but note my disclaimer in the
front).
After all that, here's a quote from the year 1759... it may raise a faint smile:
"Small debts are like small shot; they are rattling on every side, and can scarcely be escaped
without a wound: great debts are like cannon; of loud noise, but little danger."
-- Dr Johnson, from "The Life of Johnson" by Boswell.
bill collectors