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Two Step Process for Collecting Overdue Debt

by | 16 Sep 2020 | Business Law, Litigation

We understand debt collection can be a very frustrating.  In our experience, the best strategy to successfully recover debt is a two step process:

  1. First, you need to prove the debt is in fact owing; and

     

  2. Second, you need to threaten the debtor with insolvency, which is usually enough to motivate the debtor to pay the debt.

This two step process is slightly different depending on whether the debtor is a company or a person.

Debtor is a company

For a debtor company, the first step is to send the company a statutory demand, which is a court document demanding the company to pay its debts.  Before issuing a statutory demand, it is important to be sure that the debt is not disputed by the debtor.

If the company does not comply with the statutory demand  within 15 working days,  then it has committed an act of insolvency.   On this basis, you will be able to file an application at the High Court to have the company liquidated.  

Debtor is a person

If the debtor is a person, the first step is to go to a tribunal or court to get a judgment against the debtor confirming the debt owed.

Once you have obtained a court order, you can then issue a bankruptcy notice on the debtor.  If the debtor does not pay the debt within 10 working days of the bankruptcy notice, then you can apply to the High Court to have him or her adjudicated bankrupt.

Please contact us if you have any problems collecting debt, and we would be happy to assist you through the debt recovery process. 

Kenneth Sun

Kenneth Sun

Partner & CEO

Kenneth is the founding partner of Capstone Law.  Kenneth has a MPhil from the University of Cambridge, and he was also awarded the prestigious Dean’s Academic Achievement Award for graduating from the University of Auckland law school in the top 5% of his class. Kenneth has worked at some of the best law firms in the country before starting Capstone Law.

kenneth@capstonelaw.nz

+64 9 555 0386