Chapter 16 - Debt recovery. At the end of this chapter you should understand: the steps that should be taken before deciding to grant credit to an applicant, the steps used to encourage punctual payment of debts, the steps in the debt collection process, the matters that should be considered before commencing legal proceedings,...
This is the prescribed textbook for your course Available NOW at your campus bookstore! Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Copyright © 2000 McGraw-Hill Australia Debt recovery Chapter 16 Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Copyright © 2000 McGraw-Hill Australia Definitions • Debtors: Those people who owe money to others • Creditors: Those people who are owed money Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-3 Copyright © 2000 McGraw-Hill Australia Creditworthiness check • Proof of identity of applicant - Name - Address - Assets and liabilities - Employment status If company: - Name of Directors - Address of Directors - Paid-up capital of company • Credit references • Confirm ownership of property Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-4 Copyright © 2000 McGraw-Hill Australia Credit policy • Credit policy should be notified to debtor e.g When payment is due Acceptable methods of payment Interest charges for late payments Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-5 Copyright © 2000 McGraw-Hill Australia Punctual payment Incentives to encourage punctual payment of debts: • Discount for early payment • Credit charge for late payment • Notification of overdue accounts - account rendered sent - personal phone call Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-6 Copyright © 2000 McGraw-Hill Australia Debt collection process ACCOUNT RENDERED (for unpaid account) LETTER OF DEMAND Details of debt Date debt incurred Specify date payment to be made Specify legal proceedings will result PAYMENT MADE AFFIDAVIT OF SERVICE Proof of service of Summons Copyright Negotiation or Mediation or Arbitration SERVICE OF SUMMONS Given to Defendant Debt Collection Agency LEGAL PROCEEDINGS COURT ISSUES SUMMONS Particulars of claim: Names - plaintiff and defendant Addresses - plaintiff and defendant Details plaintiff’s claim 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-7 Copyright © 2000 McGraw-Hill Australia Defendant - possible responses Service of Summons Agrees to Pay in Lump Sum Agrees to Pay in instalments Dispute Claim via Filing Defence For Defendant Finish Copyright Through Court Judgement Against Defendant (Judgement in Default) For Plaintiff Judgement Plaintiff - Judgement Creditor Defendant - Judgement Debtor 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-8 Copyright © 2000 McGraw-Hill Australia Enforcement of the judgement ENFORCE THE JUDGEMENT EXAMINATION SUMMONS/ORAL EXAMINATION Ability of debtor to pay is examined INSTALMENT ORDER Payment by instalment EXECUTION AGAINST GOODS Seizing goods of debtor and selling to satisfy amount owing GARNISHEE ORDER Paid on behalf of debtor by employee or bank (ATTACHMENT OF EARNINGS ORDER) Copyright BANKRUPTCY PROCEEDINGS Debt > $2000 EXECUTION AGAINST LAND Sell land owned by debtor at public auction 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16-9 Copyright © 2000 McGraw-Hill Australia Unacceptable behaviour when collecting debts Consumer Credit Code • Prevents debt collector from entering residential property to repossess goods State Trading Acts • Prohibits the use of physical force or undue harassment or coercion Trade Practices Act 1974 (Cwlth) • Prohibits the use of physical force or undue harassment or coercion by corporations Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 16Copyright © 2000 McGraw-Hill Australia ... Creditworthiness check ã Proof of identity of applicant - Name - Address - Assets and liabilities - Employment status If company: - Name of Directors - Address of Directors - Paid-up capital of company • Credit... McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 1 6- 3 Copyright â 2000 McGraw-Hill Australia Creditworthiness check ã Proof... ownership of property Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning 1 6- 4 Copyright â 2000 McGraw-Hill Australia