Before you seek legal help, you should do all you can to ‘encourage’ the debtor to pay you — send them a firm but polite letter that makes it clear what the amount of the debt is, what it is for, and by when you require payment. If you are a business, make it easy for your customers to pay their bills — consider a range of payment options.
If all else fails, you may need to start legal proceedings. Find all the papers you have that relate to the debt and take them to your lawyer.
Sometimes a letter of demand from a lawyer’s office, prior to commencing any legal action, can work wonders. You may be able to resolve the problem by the debtor paying the debt — immediately or over a period agreed by you — in negotiations.
If you engage a lawyer, you will be responsible for their fees, whether or not you recover money from the debtor. You should consider whether the cost is worthwhile, bearing in mind the amount of the debt, the likelihood of obtaining judgment, the limited amount of costs recoverable, the costs you may be required to pay if you are unsuccessful, and the prospects of enforcing any judgment.
You must act against the debtor within six years from the date on which the debt arose. After that you may find that your claim is “statute barred.”
Issuing a claim
Your lawyer will commence proceedings by filing an originating claim with the Court, a copy of which will be served personally on the debtor.
If the debtor does not contest the claim within a stipulated timeline after being served, your lawyer can apply to the court for judgment in your favour, converting your claim into a judgment debt which can be enforced by execution through the court.
A default judgment can be set aside by the Court if the debtor has a valid explanation why the claim was not defended in time. In that case, the court would normally allow a defence to be filed within a certain time. The court may order the debtor to pay costs; however, this is not guaranteed.
What if a claim has been made against you?
If you are served with a claim you have several options. If you do owe the money, you should pay the debt if you can to avoid incurring any further costs. If you admit part of the debt but not the whole amount, your lawyer can file a document admitting the amount you are prepared to pay — the creditor may accept that amount, or if not, the court will decide the matter. Otherwise judgment will be entered against you for the amount admitted.