How to Collect Debts Using Statutory Demands

How to Collect Debts Using Statutory Demands

Hi, my name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia.

We collect debts against many companies who simply ignore us, hoping the debt will somehow disappear. This is when we can play a few cards up our sleeve. One of them is a Statutory Demand.

A Statutory Demand, made under Section 459E of the Corporations Act 2001 (“The Act”), gives the company owing the debt 21 days from the date it received to pay the money. If they choose, they can apply to have the Statutory Demand set aside on the grounds the demand is defective or if they have a genuine dispute about the debt it is based on. However, they must do this within the 21 days.

If they don’t act within the 21-day timeframe, the company is presumed to be insolvent in accordance with Section 459C of the Act. We (our legal arm, ADC Legal) can then file an application to wind up the company, using their failure to comply with the Statutory Demand as proof that their company is insolvent. This means therefore, that a Statutory Demand is a useful way to pressure a company to pay its debts.

One of the significant advantages of Statutory Demands is that it is not a requirement to get judgment first against the debtor company. This means that to commence action it is much faster and much more efficient, as well as being significantly less costly in legal fees. If a judgment has not been obtained then there must be an affidavit accompanying the Statutory Demand, verifying that the debt is due and payable and that it complies with the rules laid down for Statutory Demands.

A Statutory Demand can be served by leaving it at the registered office of the debtor company, sending it by post to that office or delivering a copy of the Statutory Demand personally to a director of the company who resides in Australia.

From the debtor’s point of view, the problem with the Statutory Demand is that once the time for compliance with the demand has expired, there is absolutely no opportunity of contesting the demand. Moreover, the debtor can be forced to pay the debt and legal fees or risk being wound up unless there is a valid application filed and served to set the demand aside.

Statutory Demands can be very effective and certainly powerful to a creditor. Using a Statutory Demand can be cheaper, faster and more efficient in recovering debts due than other methods and if done properly can be done in circumstances where the debtor must deal with you and do so urgently.

Indeed, a Statutory Demand can be used a quick means of a debt recovery.

To find out more about how to collect debt using Statutory Demands, you may contact me at Debt Recoveries Australia on 1300 799 511. You may also email me at email@debtrecoveries.com.au or Skype at debtrecoveries.

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