Engaging a debt collection agency to issue a Statutory Demand once a client is behind payment can be one of the fastest and most effective ways of recovering money owed by a debtor. A Statutory Demand is a formal request made by a creditor and stresses the importance of dealing with the receivable promptly since, by law, the debtor company has to pay the debts within 21 days.
Filing a Statutory Demand is common practice for a debt collector to ascertain whether a company can pay its debts and to compel it to do so. Furthermore, such a demand prevents enterprises from trading while insolvent and gain further debts. It is also one of the most effective ways of enforcing a judgment of the Court.
If the Statutory Demand was set aside or failed to comply by the debtor, the debt collection agency will then issue an application for Winding Up to the Supreme Court. Unless it is a judgment debt, the Winding Up application is combined with an affidavit, which confirms the Statutory Demand was served and failed to comply, as well as that the payment remains outstanding.
On the occasion that the debtor can’t invalidate the conjecture of insolvency after the Statutory Demand was filed, a Winding Up Order is made by the Court. Having been issued, such an order will result in a Liquidator appointed over the debtor’s business assets. The debtor is now asked to provide considerable evidence of its financial position to the Court to rebut the presumption of insolvency. In most standard construction arrangements Winding Up will most commonly lead to a termination of the contract.
Seeking legal assistance to recover a debt by hiring a debt collector for preparing, filing and serving a Winding Up application and Statutory Demand is beneficial since both are technical documents.
In the building sector, there are several preferred options for debt recovery such as:
- Manage your debtors to ensure they do not owe you too much over too long a period. Otherwise, you could find yourself carrying out a quantity of work that may never be paid for
- As a builder, this may mean keeping a tight rein on contract administration
- Seek evidence of an owner’s capacity to pay
- Ensure that you have documentation of variations
- Be prepared to suspend works under the contract, or issue a notice of default, if payment is outstanding for too long
If you would like to learn more about the debt collection services we offer, contact us now. We have over 30 years of experience providing professional and discreet debt collection solutions for clients of all sizes and across all industries. We have debt collection offices in Sydney, Melbourne and Brisbane.