Effective debt recovery can mean the difference between a successful small business, and one that fails due to inefficient cash flow.
There are many legal avenues available if a letter of demand fails to have the desired effect and debts remain outstanding.
What can you do if a letter of demand doesn’t work?
A Statutory Demand is a formal demand that can be used when for debts over $2,000.
If served with a Statutory Demand, a debtor will have 21 days to comply in one of the following three ways:
- Negotiate a settlement with the creditor;
- Pay the debt in full; or
- Apply to have the Demand set aside.
If a debtor does not do any of the above in the timeframe, the creditor is entitled to make an application to have the debtor company wound up.
Most debtor companies who wish to continue trading will pay the whole debt, or come to an arrangement to pay a negotiated sum.
There are risks associated with serving Demands, and it is important that you receive advice in deciding the best debt recovery process to meet your needs.
If you have outstanding debts which exceed $2000 owed by a company, or $5000 owed by an individual, and your attempts to recover the debt have not been successful, contact the team at Scanlan Carroll to explore your formal options for debt recovery and restore your cash flow.