DIY Debt Collection

Although it is highly recommended that you obtain professional help with any debt collection process, sometimes circumstances mean that it may be more efficient for you to do some debt collection yourself if you have done this before and you are confident that you can perform these tasks effectively. So what are some of the steps involved in a DIY debt collection?

1. Gather Information

The first step to any successful debt collection is to gather accurate, up-to-date reliable information about the debtor, what they owe you and other details which will assist you to contact them and illicit payment from them for the correct amount of money owing to you. If you have done business with them, your business should have some record of transactions with them including simple but vital details such as names, phone numbers, addresses, company name and address, ABN, ACN, registered office of a company and anything else that will assist you to locate the debtor. Then you will also need data relating to the money that is owed to you by the debtor. You will need the invoices, the contracts or other documents which prove that you have a right to claim outstanding funds from them.

2. Make Contact

You can contact the detbor iniitially with phone calls to a follow up the late payment. This is a good first option because it will be a very cheap and simple way of prompting them to do this and it will quickly and simply remind any debtor that they need to pay and how they can pay. It will prompt payment in any case where the debtor has honestly forgotten. Often they can be embarassed by the fact that they haven’t paid you and will make payment immediately if this is the case.

3. Send Letters

If phone calls are not working, then it is time to put things in writing. Send a letter detailing the information you have collected and giving a time frame in which the person or company should pay. Initially only a reminder letter is necessary, however, if you receive no response to this you can send a letter of demand (we have templates avialable for doing this on this site, just click below). A letter of demand details the amount owing and the documentation on which the amount is based. It then gives an ulitmatum, and in the same text, notice, of the intention to commence legal action without further notice unless the debt is paid. This ultimatum should state a specific time frame which is normally between 7 and 14 days.

4. Hire a Lawyer

If none of this works you are going to have to sue them to get your money back. At this point you should certainly get legal advice and possibly retain a lawyer to assist you with this debt collection. You will need a statement of claim to be filed, usually in the local court near where you are situated. Most lawyers normally do this fairly cheaply. Once you have this judgment, assuming the matter is not defended you can seek to enforce the order using a writ for the levy of property, or if the debtor has become insolvent by commencing winding up or bankruptcy proceedings.

Debt Collection Letter Resources