A debt collector and lawyer both provide representation and advice, assisting clients to navigate the legal system. Especially in debt recovery, their comprehensive understanding of the legal framework can lead to more effective strategies for their clients.
A solicitor must always act in the client's best interest and their actions are overseen by the Legal Services Commission under the Legal Profession Act 2007.
On the other hand, a debt collector is primarily tasked with recovering overdue debts on behalf of clients.
Their expertise lies in the realm of debt, making them highly specialized in achieving their objectives.
They typically operate on a "no win, no fee" basis, and their scope of operation can vary depending on the tasks they undertake.
When weighing the choice between a lawyer and a debt collector, one must consider various factors.
While debt collectors might offer quicker recovery times and potentially lower costs, lawyers bring the advantage of in-depth legal knowledge and the power to enforce payments in court.
The decision ultimately depends on the specific circumstances and needs of the individual or business seeking to recover a debt.
What is a Lawyer?
A lawyer is an individual responsible for the assistance and representation of clients in legal circumstances. They are often employed for the purpose of a professional opinion and inform clients of their rights and responsibilities, or obligations, in the field of law.
They apply the law to specific circumstances in cases and try to create the optimal outcome for clients.
Regarding debt recovery, a solicitor's knowledge of the legal system may be significantly more extensive, so strategy and reasoning can be more effective with a lawyer.
A debt collection lawyer will generally attempt to negotiate debts to maximise results for clients while simultaneously minimising legal costs for clients.
A solicitor must always act in the best interest of their client and not pursue personal gain at the cost of the client. They must also act in a timely manner, meaning they must act in the most time efficient way they find possible.
What is a Debt Collector?
A debt collector is an individual or company responsible for the recovery of unpaid debts due to clients, especially when said debts are past due. Businesses will generally hire debt collectors to prevent costs spent pursuing those with overdue debts, as debt collectors are generally more cost friendly.
Regarding debt recovery, they are generally more knowledgeable as the basis of their business is exactly that. They are also specialists in debt, so may have higher success rates in retrieving creditors' unpaid debts than other alternatives.
Debt recovery by debt collectors in Queensland is governed by The Queensland Office of Fair Trading. This requires debt collectors to follow specific guidelines while pursuing clients’ needs.
Debt collection agencies will offer a “no win, no fee” model, meaning if they are unable to recover your debts you will not be required to pay.
Most debt collectors are required to be licensed or registered. This applies if their work includes:
- Repossession (locating and recovering goods)
- Collecting debts in person
- Serving documents
This does not apply if their work only consists of:
- Collecting debts
- Contacting debtors in a remote fashion (over the phone etc)
They are generally required to assist clients to the best of their ability in the fastest, most efficient manner they can manage.
Their responsibilities consist of:
- Collect unresolved debts from clients
- Managing various accounts for debt collection purposes
- Locate and contact individuals with unpaid debts to creditors
- Maintain files on debtors
- Maintain records on any offending debtors
Advantages of Working with a Debt Collector:
- Recovery time: Debt collectors generally work on a commission, meaning they will usually recover your debts in the fastest manner possible! If you want your debts returned faster, a debt collector may be the way to go.
- Cost: Depending on the size of debts, the cost of a debt collector may be smaller than the cost of hiring a lawyer.
- Freedom: When debt collectors take on your case, they will take on all requirements and responsibilities regarding the debt that you previously had, leaving you free to do whatever you please, stress free!
Advantages of Working with a Lawyer:
- Enforcement Abilities: Lawyers have full ability to bring debtors to court if needs be, meaning depending on your situation and debtor, a lawyer may be able to enforce a payment in court.
- Cost: As aforementioned, debt collectors generally work on a commission, taking a percentage of your recovered debt. Lawyers however generally work on an hourly basis, meaning depending on the size of your debt, a lawyer may save you funds.
- Knowledge: A lawyer will usually have a more extensive knowledge of the legal system, meaning their understanding of debt recovery, negotiation, settlement, etc may be better than a debt collectors, benefitting you as a debtor.
5 Questions You Should Ask a Debt Recovery Lawyer
Are you considering pursuing a debt claim in court against another party in the form of litigation by using a debt recovery lawyer?
If so, you may feel a little overwhelmed with the considerations you have to make and the planning and preparation that goes into such a matter.
This is a fair and valid concern as a matter in court can be quite complicated, time-consuming, and expensive.
It is essential that you do not enter into a courtroom careless and without engaging in the proper preparation or consideration if it is the right route for you and your matter.
This, however, can be a stressful period as, especially if this is your first experience in court, you will not really know what to expect or plan for.
This is why it is useful to have some key questions to guide you in deciding if you should go to court or not!
Who Should You be Pursuing?
The first question to ask your debt recovery lawyer before pursuing a debt recovery matter in court is who the person that you should be pursuing is and what exactly they did that caused you damages.
This consideration may seem to be a little obvious, but it is overlooked by many people when looking to make a debt claim.
Generally, these kinds of matters appear pretty black and white in the means that there is usually one party versus another.
This, however, is not always the case!
In any agreement or other such arrangement, there are multiple parties involved, even if it may seem like there is only you and another.
It is vital for the well-being of yourself and your matter that you take the time to research and consider who is actually responsible for the damage that took place.
This way, your case is much more likely to work out in your favour. It also allows you to prepare for your matter based on the correct party’s information.
Were they Entirely at Fault?
Another question to ask your debt recovery lawyer when considering pursuing a debt recovery matter in court is regarding whether or not the party you are looking to sue is entirely responsible for the damages that occurred.
This is a key consideration as, without doing so, several things can go horribly wrong in your matter.
You see, sometimes parties will decide it is not worth their while to sue another party due to the fact that there is simply not much to gain from doing so.
However, if said other party decides to sue them over something separate, they may have no choice but to do so.
If there is any chance that you are also at wrong in the matter discussed, this can happen to you!
This is, of course, the absolute last thing anyone wants when suing someone else as, without even knowing it, they may push the hand of the opposing party to do the same to them!
This can result in you not only losing your matter but actively having penalties placed on you instead.
What Evidence Can You Use?
What evidence you would need to gather and use to support your standpoint on the matter is another question that you should ask your debt recovery lawyer when considering pursuing a debt recovery matter in court.
In any legal matter, providing useful and adequate evidence to the courts of pretty much anything that they could ever need is an essential!
When you are preparing for your matter, it is vital that you take the time to collect as much evidence to prove that you both experienced damages and that said damages were the fault of the defendant.
This way, anything that the court may require will be in your possession and ready to use to prove your case and hopefully win it.
Will They be Able to Pay?
Another key consideration that you should ask your debt recovery lawyer when deciding whether or not you should pursue a debt recovery claim in the courts is if the other party will be able to pay if you win the matter.
It is all fun and games pursuing a debt claim and winning the matter in court, but that isn’t necessarily the end of the story.
There are, unfortunately, still several things and details that could potentially go pear-shaped and result in the judgement made not really being of much benefit to you. In shorter terms, if the other party cannot afford to make the payment, you may have wasted your time and money pursuing a debt claim that you will not gain anything from.
If the party you are looking to pursue has caused you damage due to their personal financial issues (e.g. they can’t pay a debt to you due to their poor financial situation), you may consider following alternative routes to resolve the matter (payment plans, etc).
Is it Worth Your Time?
Another question that you should to ask your debt recovery lawyer when considering pursuing a debt recovery matter in court is regarding whether or not the matter itself is worth your while to pursue.
No one likes it when agreements are broken, especially when you end up with damages because of it.
This is an extremely frustrating situation, and your first instinct may be to just sue the other party and get what is rightfully yours.
This, however, is not always the best idea for the situation you are in.
As an example, say someone owed you $200 and they, for some reason, did not pay you this money. This can be a lot of money, and this is definitely an injustice.
However, suing someone for the said $200 is probably not worth your while.
The legal fees will probably cost more than the debt, not to mention the valuable time that will be snatched up by the court!
It is vital that you properly consider whether suing is worth your while and don’t act strictly on emotion.
Debt Recovery Lawyer Key Takeaways
Deciding whether or not you should pursue a debt claim against another party in court is an important decision.
The weight of this choice can easily pile up on top of you and make you feel quite anxious and stressed about the whole situation.
This is why it is helpful to have some key questions to ask yourself to guide your considerations towards an informed decision.
Use Debt Collectors before Lawyers
Ideally, those who are owed money (such as unpaid invoices) should first use debt collectors, before taking legal action.
The reason for this is due to the fact that a debt collection agency often works on a commission basis, and so it saves money on legal fees.
This means that in the event the debt collection agency is unable to recover any funds, you do not have to pay.
Further to that, the court process often requires that there are measures to recover the debt before legal action, and debt recovery serves one measure to recover a debt other than legal action.
Debt collection agents will often also be of great assistance in the sense that reasonable attempts to recover money usually need to be made before pursuing legal action.
In this article, our specialist debt collection experts give you some reasons why you should use debt collectors before engaging lawyers.
Use Debt Collectors before Lawyers
The importance of hiring a debt collection agency instead of simply attempting to collect the debt yourself might be that debt collection agencies are generally working within the regulations as legislated by federal and state laws, and so when working with a debt collection agency, you are free from the worry of potentially breaking the law in your attempts to recover funds.
The legislation surrounding what is and isn't legal when attempting to recover debts can be time consuming and complicated when attempting to understand it.
Another reason to first engage a debt collection agent before hiring a debt recovery lawyer is that in some instances the recovery of a debt may be quicker.
As debt recovery is generally commission only, this is a strong form of motivation to recover the debt.
This is a particularly noteworthy point for those whose main reason of collecting a debt is serious and time sensitive cash flow issues.
Further, with a view to alleviating cash flow issues, the benefit in hiring a debt collection agency can also be seen in that when you as a supplier of goods or a service provider are too busy following up on debts, you are unable to provide your goods or services.
Another benefit to hiring a debt collector is that during their efforts to collect the money, they will also document the efforts, which will be needed in the event that the debt is able to be recovered and you are forced to claim the debt as a tax write off.
What is the Legal Debt Recovery Process?
The legal debt recovery process is a series of steps that a creditor can take to try to collect a debt from those who owe them money.
It is important to ensure first that the money has in fact become payable, and that the payment is not being asked for before it has become due.
The formal court process typically begins with a demand letter, which is a formal notice that requests payment of the amount owed. If the debtor does not respond to the demand letter, or is unable to pay the debt, the creditor may then decide that the only way recover the debt, is to pursue legal action.
The first step in the legal debt recovery process is to file a claim with the court, which outlines the nature of the debt.
The creditor will need to provide evidence of the debt, such as a contract or invoice or any other form of evidence which proves there was a relationship with a debt then subsequently arising.
Then, the next step involves submitting a statement of claim to the court. The debtor will then have the opportunity to respond to the claim, and in doing so they might present any defences or counterclaims that they may have, which may reduce the debt, or reject the existence entirely.
Use Debt Collectors before Getting Judgment
If the creditor is successful in their claim, the court will issue a judgment in the favour of the creditor, generally for the amount owed.
The judgment will include the amount of the debt, and may also award interest as well as legal costs.
The creditor can then take steps to enforce the judgment, such as an enforcement warrant for redirection of earnings.
This is a process whereby a third party who has money belonging to the debtor in question, such as the debtor's employer or bank, is legally required to pay the creditor the debt amount owed, even before the money is paid to the debtor.
However, it should be noted that a an enforcement warrant for redirection of earnings will be one of the last orders made, they are generally only made when a debt has gone unpaid for a seriously long time, when no agreement can be reached regarding a repayment of debts, and when all other debt collection and legal recovery methods have been unsuccessful.
Another option, in some cases, might be to pursue personally against the director/s of the company who owe you a debt.
Depending on the structure of the company, this may not always be a viable option, but in the first instance it is an option that might be worth exploring with both debt collection agents and lawyers.
Further, seizing all or some of their assets, so long as the assets seized can pay the entirety of the debt amount. This means, if the debt amount is $25,000, then a television that is worth $1,500 cannot be seized in the effort of having the creditor repaid.
Use Debt Collectors for Construction Debts
In specific industries, there maybe additional measures to first go through to recover payments.
The construction industry has the Building Industry Fairness (Security of Payment) Act of 2017, which to some degree assists with recover debts.
In the event you are working in the construction industry and are looking to recover a debt, this legislation gives both debt collection agents and lawyers the ability to quote certain legislative requirements, and remind those working in the construction industry of their legal obligations under the act.
If the debtor is unable to pay the judgment, the creditor may be able to negotiate a payment plan or arrange for the debt to be paid over time. In some cases, the creditor may also be able to negotiate a settlement of the debt for less than the full amount owed.
If a settlement is agreed upon, generally a deed of settlement is then committed to by both parties to formalise the process.
Collections Collate all the Documents a Lawyer Needs
Another reason to use debt collectors first, is because if the debt collection agency is unable to collect the debt, then they are well-versed in forwarding the file to a debt recovery lawyer.
This means that you will save time and money, as this work will be done for you.
Use Debt Collectors
It is important to note that the legal debt recovery process can be complex and time-consuming, and it is recommended that creditors seek legal advice before pursuing legal action.
Debtors who are facing legal action should also consider seeking legal advice to understand their rights and options from a debt collector and a lawyer.
Debt Collector and Lawyer - FAQ
Navigating the world of debt recovery can be complex and challenging. Whether you're looking to understand the difference between a debt collector and a lawyer, or you're seeking guidance on which route to take, our FAQ section offers clarity.
Read on to equip yourself with essential knowledge, ensuring you make informed decisions tailored to your unique situation.
Is debt recovery the same as debt collection?
No, debt recovery and debt collection are not the same thing. Debt collection is the process of a creditor attempting to collect on debts owed by its customers. Debt recovery is the process of a third-party attempting to collect money owed to another creditor or business. In other words, debt collection is done by the creditor itself, while debt recovery is done by a third party, such as a debt collection agency or a lawyer.
What is the difference between a debt collector and a lawyer?
Debt collectors and lawyers are both professionals who can help creditors collect on debts. However, there are some key differences between the two. Debt collectors are typically licensed by the state and must follow specific rules and regulations. They may use a variety of tactics to collect on debts, including phone calls, letters, and even in-person visits. However, debt collectors are generally prohibited from engaging in abusive or threatening behaviour.
Lawyers are also licensed by the state and must follow specific rules and regulations. However, lawyers have more legal authority than debt collectors. For example, lawyers can file lawsuits against debtors and garnish their wages.
What is the primary role of a lawyer?
A lawyer assists and represents clients in legal situations, informing them of their rights and responsibilities. In the context of debt recovery, a lawyer's extensive knowledge of the legal system can make strategy and reasoning more effective.
How does a debt collector differ from a lawyer?
A debt collector is mainly focused on recovering unpaid debts for clients, especially overdue ones. They often work on a commission basis and may have specialized knowledge and higher success rates in debt retrieval. On the other hand, lawyers possess a broader understanding of the legal system, can represent clients in court, and have the ability to enforce payment legally.
What are the advantages of hiring a debt collector?
- Recovery time: Debt collectors typically work faster due to their commission structure.
- Cost: Depending on the debt size, hiring a debt collector might be more cost-effective than a lawyer.
- Freedom: Debt collectors manage the entire recovery process, letting the creditor be stress-free.
What benefits come from hiring a lawyer for debt recovery?
- Enforcement Abilities: They can bring debtors to court.
- Cost: Lawyers often charge hourly, which might save money depending on the debt size.
- Knowledge: Their extensive understanding of the legal system can be advantageous.
Why should I use a debt collector before resorting to a lawyer?
It's often more cost-effective since debt collectors work on commission and legal fees can be saved. The court process usually requires debt recovery measures before legal actions, and debt collectors provide that initial step. They also document their collection efforts, which can be beneficial for tax purposes or future legal actions.
What are the key questions I should ask a debt recovery lawyer before taking a case to court?
- Who should you be pursuing?
- Was the other party entirely at fault?
- What evidence can support your case?
- Will the debtor be able to pay if you win the case?
- Is pursuing the matter in court worth your time?
What's the primary advantage of hiring a debt collection agency over doing it myself?
Debt collection agencies are usually compliant with the intricate federal and state laws surrounding debt recovery, ensuring that you won't accidentally breach any regulations. They also might recover debts faster, given their commission-based motivation.
Can you outline the legal debt recovery process?
The process generally starts with ensuring the money is indeed payable. Then:
- Send a demand letter formally requesting the payment.
- If the debtor doesn’t respond or can't pay, consider legal action.
- File a claim with the court detailing the debt.
- Submit a statement of claim to the court.
- Allow the debtor to respond to the claim and possibly present defences or counterclaims.
Are debt collectors required to be licensed?
Yes, most debt collectors need to be licensed or registered, especially if they're involved in repossession, collecting debts in person, or serving documents. However, they might not need a license if they only deal with remote communication methods, like phone calls.
How are the actions of lawyers supervised?
The actions of lawyers, especially solicitors, are overseen by the Legal Services Commission under the Legal Profession Act 2007. They are required to act in their client's best interests, refrain from pursuing personal gain at the client's expense, and operate efficiently.
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.