Collect Debt Using Credit Default and Stat Demand

A Client recently engaged Slater Byrne Recoveries to help collect a three-year-old debt. The Client referred this debt to another debt recovery company last year but that firm was unable to collect the amount and, thus, the debt remained outstanding.

To recover the amount, we employed a two-pronged strategy that used both credit default listing and a Stat Demand to recover the unpaid debt.

Collection Using Credit Default and Stat Demand

The Issue

The Client has three unpaid invoices for services. The debtor has not disputed the amounts but our Client said they were merely ignoring their obligation to pay. Because of the debtor’s delaying tactic, the Client was determined to obtain a court judgment against the debtor.

The Problem

The main difficulty, in this case, was the debtor’s unresponsiveness. We have tried all modes of communications allowed by law – email, SMS, and telephone – to contact the debtor but we were never able to get any response nor action from them.

When they finally returned our email, it was to tell us that we need to personally serve the letters of demand to the owner and not to their listed business address. We insisted that for Stat Demands, we are only required by law to serve them by post to the registered office address of the debtor company.

The Solution

To add pressure to our debt collection strategy, we pursued the following:

1. filing a Credit Default, and

2. issuing a Statutory Demand.

Ashleigh, the accounts manager in charge of this case, pursued these solutions simultaneously.

For the Credit Default listing, we told the debtor that, until the full amount is paid, the default listing against them will remain outstanding. One consequence of a credit default — which many companies cannot afford to suffer — is the possibility of being unable to get any credit or loan for 5 years. Read our more in-depth article on Credit Defaults and how they can help you recover bad debts faster.

With the Stat Demand, as we have illustrated in past case studies, the Client can pursue a winding-up application against the debtor if the debtor fails to pay within the time frame provided for in the Stat Demand. Read our article on how and when to issue a Stat Demand when you have an undisputed unpaid debt.

Faced with the possibility of being denied credit or ending up in wind-up, the debtor finally paid the outstanding amount.

Lessons to Learn

Being a small business, as the Client, in this case, it may be difficult for you to juggle the administrative task of sending out invoices and following up on their payment with the more important task of operating your core business.

One of the lessons to learn from this case is to outsource your debt collection tasks to professionals so you can focus on your core business operations.

Another lesson to learn here is to lodge your invoices to a debt collection agency as soon as you are faced with difficult unpaying debtors.

We at Slater Byrne Recoveries can report on a high debt collection success rate partly due to our license which enables us to lodge credit defaults with a credit agency, and partly because we look for out-of-the-box solutions, such as tailored legal action to recoup bad debts for our clients.

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