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Dealing with Difficult Debtors – An SBR Case Study

Difficult debtors can be a nightmare to deal with as they have many strategies to delay the debt recovery process and ramp up costs for creditors. It’s at times like these that it truly pays off to have professional debt collectors at your side.

We know the ins and outs of the debt recovery process and the laws governing it. This gives us the advantage necessary to ensure we can collect payment from even the most difficult of debtors. We recently had to use this advantage to help a client who was dealing with a particularly uncooperative debtor.

The Case

This Client approached Slater Byrne to recover a debt of over $40,000. We reached out to the Debtor several times, but we did not get a response. We then went to court and obtained a judgement to issue a bankruptcy notice. While the bankruptcy notice was being drafted, we finally heard back from the Debtor. He said he was disputing the debt and he had applied to the court to have the judgement set aside.

When this happens, court hearings are typically set to give the Debtor a chance to present his reasons for disputing the debt. We went to the first court hearing on behalf of our Client but the Debtor did not attend.

A second court hearing was scheduled on the request of the Debtor. But when the day came, he still did not attend nor did he provide any instructions to his solicitors.

The Outcome

It was clear to our team that the Debtor was purposefully delaying the process, but we were not about to give up. After the Debtor was a no-show at the second hearing, we again applied to the court to obtain a judgement for a bankruptcy notice. When the notice was issued, we went to personally serve it to the Debtor but he was avoiding us.

So, we took the next best option, which was to post the bankruptcy notice to his last known address—the same one where we sent the claim.

The Debtor had 21 days to pay the amount he owed, which had now increased to over $60,000 to include the money awarded to our Client from the hearings, plus solicitor’s fees and commission costs. If the Debtor fails to settle this amount within the 21-day period, he would be made bankrupt.

A week before 21-day period expired, the Debtor finally reached out to us and organised full payment.

The Takeaways

When dealing with difficult debtors, it’s important to be persistent and to have the right people on your side. Professional debt collectors have the knowledge, experience, and resources to handle these kinds of situations successfully.

Another key takeaway is to make sure your contracts of trade include a clause that allows you to add collection costs to the total amount owed by your debtors. This way, you won’t end up paying out of pocket for the debt recovery process.