COVID-19 Q&A | Sintons | Debt Recovery

During these unprecedented times, where the situation is changing on a daily basis, we are aware that individuals and business owners will have many questions and uncertainties about how these developments impact on them.

Here, through a series of Q&A with expert lawyers from across our firm, Sintons hopes to be able to answer some of those pressing questions, and provide some certainty and clarity for people who are unsure how to proceed.

Q – My business is owed money by a customer and despite numerous approaches, we have not been paid. I had always considered legal action as a last resort, but at what point do you think that should become an option?

A – Unpaid invoices should be chased without any hesitation.  As soon as an invoice falls outside of your payment terms you should be contacting the debtor to request payment.  You can provide for an additional time to pay subject to negotiation but always remember that any additional delay may impact your chances of recovery.  If you are considering legal action there are specific pre-action protcols which must be followed before commencing formal legal action therefore it is imperative this process be commenced as soon as possible to provide the best chance of recovering the debt.

Q – I am owed money by a friend. I have recently lost my job and need this money to be repaid so I can support my family. My friend will not respond to me and I feel desperate. What can I do to quickly get this money back?

A – Whenever you loan money always ensure that the terms of the loan are clear for both parties.  Never loan money without a clear understanding of when repayment of the loan is expected.  Even in the cases where it is a loan between friends on good faith, we would suggest you confirm the terms of the loan agreement in writing (email will suffice).  Before commencing any formal legal action to recover the loan, ask your friend whether they are in a position to repay the loan in full, and if not, whether they are able to commit to repay the loan by way of instalment payments.  Where possible have any proposal and exchange between yourselves in writing (text or email).  Any written response from your friend accepting the debt, will assist you if formal proceedings are necessary at a later stage.  It is natural to want to maintain the friendship if possible but, all too often we see friendships end abruptly in these situations.

Ultimately, successful recovery depends on your friends’ personal financial circumstances and their ability to repay the loan.  If their own financial position is precarious and they have no means to pay, then you are unlikely to recovery the loan.  However, it is not unusual to see cases where the friend has the ability to pay but chooses to delay repayment for whatever reason.  Do not delay in demanding repayment and maintain correspondence with your friend.  If you feel that there is no more that you can to do recover the loan, then you should seek legal advice.  In these situations, our experience is that the ‘creditor who shouts loudest gets paid first’!

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