Before commencing legal proceedings, here are some notes about issues that you should consider.
Strength of your Case You need to assess carefully the strength of your case. Most debt claims that come to eCollect are very strong. The more that you are able to rely on documents rather than conversations to prove your claim, the stronger your claim will be.
Make sure that all relevant documents or notes have been provided to us.
If you are relying on conversations to assist in showing what the arrangement was between you and the debtor then the details of these conversations should be recorded in writing and sent to us.
As a part of their initial work, E C Legal will review the evidence in support of the claim and may, if they believe that your case does not have sufficient supporting evidence, advise you not to continue.
Your Motivation
You need to consider why you are considering litigation. Is a purely financial consideration or is it a matter of principle i.e. you do not want to let the debtor get away with non-payment. Litigation does not always go the way that you or eCollect might expect and is therefore inherently risky. If your motivation is purely financial, you should be prepared to factor in an allowance for this risk in any settlement proposal that might come up.
Capacity of the Defendant to Pay
You cannot get blood from a stone. Even if you have an order from a Court, the debtor still may not pay due to the fact that they have no money to do so. This is one of the inherent risks of litigation.
Is the defendant bankrupt? Many debtors make this claim but very few are. In the event the defendant is bankrupt all debts incurred prior to bankruptcy are extinguished. We can do a bankruptcy and / or a credit search on a person however the cost of this is significant ($100.00 - $200.00) and this cost is not recoverable from the debtor in normal circumstances.
Tribunal or Court?
In each state and territory, a potential claimant has a choice of the forum in which to bring the claim.
Tribunals (e.g. Victorian Civil and Administrative Tribunal in Victoria or the Consumer Trader and Tenancy Tribunal in NSW) are established to provide a low cost option for you to make a debt claim. The Tribunals are do-it-yourself organisations and representation by lawyers is not permitted as a general rule. E C Legal provides a service in which they will draft the initial claim paperwork on your behalf and file it with the Tribunal as well as providing you with some hints as to how to best present your case. The cost of this is around $300 - $400 and is not generally recoverable from the debtor.
For claims under $1,000, eCollect's usual recommendation is to bring the claim yourself in a Tribunal without any assistance.
Courts usually make costs orders against defendants which means money paid to lawyers to bring the claim on your behalf can be recovered from the debtor at least in part. eCollect's experience is that claims brought in the Courts usually receive a higher level of attention than claims brought in Tribunals.
Alternative Jurisdiction
If the parties are in the same state or territory, that state or territory will be the appropriate jurisdiction for the claim and you do not need to consider this section.
However, if the parties are in different states or territories, a careful choice will be need to be made about which state or territory is the most appropriate.Considerations as to where the agreement is made and the most convenient place for all the parties need to be made.
E C Legal lawyers will cover these considerations as they draft the claim for issuing by the court.
Time and Effort
Debt claims are usually relatively straightforward but, even so, you need to be prepared to give the necessary time and effort towards obtaining a successful result. This means not glossing over any part of the case and providing all the available documents to us before any further action is taken. Where conversations are going to be used to support the claim the most detailed account of the conversation possible should be written and sent to us. The more time and effort you commit, the better will be the chances of a successful case.
Roles of Lawyers and Recovery Agents
Lawyers charge for each piece of work they do or for the time they spend. Only some of that work or time is recoverable from the debtor. eCollect's role is to handle as much as possible of the work or time that is not recoverable from the debtor e.g. collating the evidence in support of your case, instructing and liaising with the lawyers, handling any settlement negotiations and reporting back to you etc.
The lawyers will consider the evidence in support of your case and will draft, file and serve all the necessary court documents on your behalf provided that the evidence reveals reasonable prospects of success. The lawyers are available for personal discussions but you need to be aware that the time spent in such discussions is payable by you.
eCollect has a further memo setting out the lawyers costs in some detail.
Two Pieces of Practical Advice
Make a decision about starting litigation or not without delay. Debts rarely get easier to collect.
Take the litigation one step at time. The path that litigation can take is highly variable despite the best efforts of your lawyers and recovery agents to direct it to the outcome we seek. Discussions about possible outcomes can waste a large amount of time especially the further away the outcome is from the current position. The option is available for you to have detailed discussions with the lawyers about all possible options however the cost of those discussions will not be recoverable from the debtor. eCollect advises that you should authorise litigation at one step at a time with a firm estimate as to the price of that step,
Starting the Litigation
Litigation works most of the time as most people think you will not do anything about the debt and consequently get a big shock when they are served. Those people pay most of the time.
These notes have been approved by our associated legal firm E C Legal who have asked us to advise readers that the notes are provided to assist eCollect clients in determining the best course of action. They are not intended to be a substitute for personal legal advice. Lawyers from E C Legal are available to discuss cases with our clients personally. To obtain full and proper legal advice, our clients should consult a lawyer in person.
Ref:CLIENT INFO SHEET - Litigation Considerations Authorised by: James Woods eCollect.com.au Pty. Ltd. Not to be reproduced without permission
Last Update: Thursday, 13 November 2008
