The Recovery Process for a Commercial Debt.
The traditional debt collection model which most agencies work by says that the debt collector will only charge you X%, (which could be 20%, 30%+ of the total debt), but only if they recover the money.
What they don’t tell you is that there can be numerous hidden fees along the way. Some will tell you after a couple of phone calls they need to carry out a field call or refer it to their legal team or their lawyers – all of which can be expensive to the customer.
In most cases, the debt collection agency is an off-shoot of the legal firm or they have some other sort of association with a legal firm. From this point, you’ll need to hold onto your hat as the legal costs now start to mount.
At Barclay MIS, our process is different from the traditional debt collection model.
The model we have developed is a result of over 35 years of experience operating in small business debt, Australia-wide.
With the Barclay MIS model, the business owner has the knowledge and safety of having all enforcement costs covered by a list fee, which is payable at the start of the action. With Barclay MIS, all litigation action is handled in-house, which means that the owner has a capped cost and is never subject to additional ongoing lawyers’ costs or court costs. The list fee covers the owner for all enforcement/litigation costs that may be involved.
However, should the matter be defended, the owner would need to retain a lawyer or attend the hearing themselves because at this point, the matter is no longer an enforcement matter but a defended matter. We can either liaise with the business owners or with the business owner’s lawyer to bring them rapidly up to date with the situation, or we can engage with a lawyer on behalf of the business owner and liaise with them. Either way, all defense costs are directly payable by the owner.
It is worth noting that defended matters are not common and the lawyer’s costs are only if we have to proceed to trial. In most cases, we are able to mitigate any need to go to trial as we deal with the initial defense application. So, on the rare occasions that we do proceed to trial, the business owner would only be responsible for costs from the briefing stage onwards.
Once a judgment has been obtained, it will appear on the debtors’ credit file for the next 3 years. This means that, should they apply for any form of credit, the judgment will appear on the credit provider’s search, having a detrimental effect on the credit application.
Barclay MIS will handle all enforcement procedures from the judgment stage and these are also covered by the list fee. These procedures include, but are not limited to: calling the debtor into court for an examination of their financial situation, garnishee of wages, and/or seizure and sale of assets.
On recovery of the monies claimed, Barclay MIS will retain a recovery commission of 22% of monies collected. Both the list fee and the recovery commission are tax-deductible to the business owner and subject to the terms and conditions applicable. They are also recoverable from the debtor. We offer a service to peruse the terms and conditions to suggest improvements for the protection of the business owner.
For more details and to discuss how an owner can enforce their rights of recovery and keep their ex-tenants accountable for their actions, call David Banks (CEO) on 1300 883 916 or email david.banks@barclaymis.com.au.
