Debt collection is difficult at the best of times. To make debt collection easier, it is natural to turn to debt collectors or debt collection lawyers to assist. But who is best placed to deal with your specific situation? To answer this, it is worth thinking about the nature of the relationship you have with the debtor.
The debt collection relationship between debtor and creditor:
Debt collection can arise in all manner of situations. It can happen when a trusted and valuable commercial associate falls on hard times, when an opportunistic borrower thinks they can get away with not paying their bills, or for countless other reasons. The nature of the debtor/creditor relationship can be integral to the approach.
Debt collectors generally get paid by taking a percentage of the debt they recover. Usually, the commission will be between 5% and 30% of the amount. This can be a good business model and motivates a debt collector to get on with debt collection as a top priority. However it may also prioritise debt collection over the possibility of any ongoing business relationships.
All lawyers in New South Wales, are bound by conduct rules that ensure they must act in the best interests of their client. This allows debt collection lawyers to look beyond the bottom line of the debt recoverable and consider a strategy that works best for the client. At Matthews Folbigg Lawyers, we understand the unique reasons leading to debt collection and where appropriate we can get it done without unnecessarily straining valuable relationships.
Unavoidable Litigation:
If there is no relationship to salvage, debt collectors can be limited in their approach. They will contact the debtor on your behalf, demand payment, and explain the consequences of non-payment. At the end of the day though, if the matter cannot be resolved, the collection of the debt will need to be dealt with by court proceedings. When this happens, debt collection lawyers will become involved, which can lead to difficulties in the process – for example inconsistencies in approach and the need to repeat some debt collection steps. There are also the delays and costs transferring the matter from the collector to the lawyers. If retained when debt collection begins, lawyers will already be familiar with the case, and can ensure all necessary steps have been taken to maximise the prospects for a successful outcome should litigation become inevitable. Retaining lawyers from the outset also gives you immediate access to advice on the prospects of debt collection without court involvement, the chances of success if the matter does go to court, possible insolvency implications (where the lawyer has insolvency expertise as well) and advice from professionals with experience dealing with debt collection in all manner of relationships.
If you are still unsure on whether a debt collector or a lawyer is better for you, we are just a phone call away and will be happy to answer any questions you have. We do not charge commissions on monies collected and understand the importance of cost effectiveness given the nature of debt recovery claims.
Matthews Folbigg Lawyers has a specialist team dedicated to Insolvency, Restructuring and Debt Recovery.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
