Debt Recovery – Debt Recovery Services Sydney, Melbourne & Brisbane

From 1st July 2011 the activities of debt collectors in this state are governed by the Fair Trading Act 1999 Part 5B. Sections 93K (1) & (2) of that Act essentially prohibits debt collectors from recovering our fees from a debtor unless a contract exists between the parties allowing for this to occur. Our legal advice indicates that for the addition of our debt collection fees to be legally binding there must be a written & signed agreement in effect. This same situation existed in the previous Act governing us; the Private Agents Act 1966 Section 38.

The relevant section of the Fair Trading Act can be found at http://www.austlii.edu.au/au/legis/vic/consol_act/fta1999117/s93k.html
The entire Fair Trading Act can be found at http://www.austlii.edu.au/au/legis/vic/consol_act/fta1999117/

Please read on for more information relating to fees, charges and legal costs of debt recovery.

• Can I collect your letter, handling, ancillary and commission fees from the debtor?
  • Unfortunately the usual answer to this question is NO (with the exception of legal costs) unless you have a contract to do so.
  • If you cannot recoup our debt collectors' fees don't be deterred. You will still receive a significant net monetary gain with a successful debt recovery.
• What if I have an agreement with the debtor to pay collection costs?
  • IF you have a properly executed written agreement with the debtor that has been signed by them and it provides for them to pay your debt collection costs or administration fees relevant to collection then it may be possible…you will need to be able to supply the original document if requested to do so.
  • Score still CANNOT add any fees to the debt however you can do so PRIOR to placement of the debt with us. You must place the debt with us for a SINGLE sum that includes the debt plus your calculation of collection costs (that calculation can include a predetermined commission component. You must use a single flat rate of commission for this calculation).
  • If the debtor requires “copy invoices “ or substantiation you will need to be able to produce an invoice for these 'fees' that makes specific reference to the relevant section of the signed written agreement and its date.
  • In the event that legal action is issued and a defence ensues some magistrates may not make an order for these fees, some will!
  • The likelihood of a defence to legal proceedings increases if such 'fees' are added to the debt and form a component of the amount sued for!
  • Score shall accept no responsibility for any resultant action or loss relevant to the addition of our charges to the debt.
• Can I recover legal costs if I sue someone?
  • YES you can if you are successful in obtaining a court judgment against the debtor or the debtor pays the debt after the issue of legal proceedings. The court will make an award for a sum that will include the debt, legal costs, and even interest. Interest is normally calculated under the Penalty Interest Rates Act 1983.
  • If your legal action is defended and you conduct a successful defence then the magistrate will determine the amount of costs awarded – this may vary from the fees charged by our solicitors to you via Score. (In Victoria there will be NO award made on defended matters with a debt under $500)
  • If the legal action you issue is defended and you lose the case then the magistrate may make an order for costs against you in favour of the defendant/s. In this scenario you will still remain liable for our costs too – so beware – if you are going to sue ensure you can prove and substantiate your debt.
  • Remember a court order does not guarantee payment. Score must still collect the amount from the defendant.