2 Step Process for Successful Businesses to Facilitate Fast Debt Collection
In our experience a detailed letter of demand, when drafted in the right way and followed up closely with a phone demand, can often resolve a matter and avoid the need to proceed to costly litigation.
2 Step Process
Step 1: Letter of Demand
More than a standard letter of demand that simply demands payment of a debt without any mention of the relevant facts or law supporting why the debt is recoverable.
We provide a well drafted, comprehensive letter of demand detailing legal specifics and sent from a lawyer that is followed closely by a phone demand by the same lawyer.
Step 2: The Phone Demand
The phone demand is a critical, yet often overlooked, aspect of effective debt recovery.
The phone demand is a telephone call made following the issue of a letter of demand and within the time allowed in the demand for payment. The phone demand is made to confirm the debtor’s receipt of the demand and to negotiate payment in full and/or a payment arrangement.
In many cases, the phone demand catches the debtor off guard, as the time for payment has not yet expired. This allows us as the lawyers to ascertain whether any genuine dispute exists and to move directly to taking or negotiating payment in full.
When lawyers are given the opportunity to negotiate a payment arrangement following a phone demand, they are able to identify any weaknesses in the client’s legal position and improve their position as part of a Payment Deed, by creating personal guarantees and other security for payment that might not already exist.
Why not just engage a debt collection agency to do this instead of a lawyer?
Debt collection agencies typically earn a commission based off of the amount of the debt recovered. This commission is typically anywhere from 15% to 30% of the debt recovered.
When a debt collection agency commences recovery action, they make a phone demand and typically either take payment, negotiate a payment arrangement, or identify that a dispute exists and refer the matter to a lawyer to resolve the dispute.
However, even if the matter is referred to a lawyer a debt collector will still accept payment of commission when the dispute is resolved, and the debt is recovered. This commission will be payable in addition to any legal fees that have been incurred.
Further, when debt collectors negotiate payment arrangements, they generally overlook the opportunity to improve the client’s legal position should the payment arrangement be breached, and further recovery action required. See here for more information.
The takeaway here is that money spent on a well drafted, comprehensive letter of demand detailing legal specifics from a lawyer that is followed closely by a phone demand by a solicitor will be money well spent.
How Can We Help
We offer a Fixed Fee for Debt Recovery. See here for more information. Contact us for a free case evaluation or call 1300 553 343.