Construction Lawyer & Building Solicitors Sydney | Contracts Specialist Law Firm

Contractors Debt Recovery Process:
How to Get Your Rightful Payment

By following the correct contractors debt recovery process, you can efficiently get the money you rightfully deserve. Consult with Contracts Specialist and we'll quickly help move things along.

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Sometimes, getting your payment after you’ve done your part for a construction project can be such a hassle. Some homeowners can definitely drive you nuts. Ideally, you’d want to get your money in a snap, but since this is not always the case, you better know your legal options now.

Contracts Specialist can help you stand up for yourself and claim what is rightfully yours! Get the right legal advice now.

Table of Contents

What is the Contractors Debt Recovery?

Debt recovery, or debt collection, is a process of collecting the payment that the project owner (the debtor) owes to the contractor (the creditor). When disputes arise in construction work, contractors experience a setback. This can result in slow payment, partial payment, and even non-payment.

NSW Debt Recovery Flowchart: How to Get Unpaid Payments

Here’s the step-by-step guide to recovering money owed to you.

  • When the debtor fails to pay on time, you should attempt to recover the debt by notifying the debtor through emails, text messages, or calls. You should know the reason why the debt has not been paid on time.
  • Send a formal letter or email requesting the debtor to pay within a given time limit. You can include that you will take a legal action if the debt remains unpaid by then.
  • You can call a Debt Recovery Lawyer to help you take legal action. The lawyer will write a Letter of Demand advising the debtor that the legal proceedings will commence if the debt is not paid in full within a given time frame.

Quick Tip: Contracts Specialist can help you with your legal situation. We have been helping our clients with Debt Recovery for more than 10 years.

A statement of claim starts a court case to get the money or goods the debtor owes to the creditor. The SoC must be filed with the proper court division. 

You may enclose a copy of the Statement of Claim with the Letter of Demand. This will give the impression that you are serious about taking legal action against the debtor.

Note: The size of the debt will determine which court will hear the claim.

The debtor has 28 days from service of the Statement of Claim to file a defence. If the debtor DOES NOT FILE a defence, you may apply for default judgment.

Note: A default judgment is a judgment made against a debtor without the matter going to a court hearing.

Pre Trial Review

The pre-trial review is an opportunity for you and the debtor to settle the case. Note that the situation will proceed to a hearing if the matter is unable to be settled at the Pre Trial Review.

Here are the options for Enforcement of legal action when the creditor is successful:

  1. Seeking Examination Summons – this includes examining the financial position of the debtor.
  2. Garnishee Order – this order directs that funds which would have been paid to a debtor are paid to the creditor instead.
  3. Writ of Execution – this is a court order where the Sheriff seizes and sells a debtor’s personal assets.
  4. Writ Against Land – a court order where the Sheriff seizes and sells the real property owned by a debtor. This applies only to debts greater than $10,000.
  5. Seeking Bankruptcy (for individuals) – if the debt exceeds $5,000 or liquidation (for companies) if the debt exceeds $2,000.
  6. Insolvency (for companies)– When a company is unable to pay the debts.

Contractors’ Legal Rights Under Security of Payment Act

Your hard work will pay off. The purpose of the Security of Payment Act is to ensure that tradespeople in the construction industry will get the right payment for the goods and services they have delivered. These are your legal rights:

  • You have the right to be paid throughout the whole construction process.
  • You can claim interests on the debt as long as the payment is outstanding.
  • Suspencion of work is allowed some valid reasons.
  • Only you can initiate Adjudication procedures under the law.
  • You have the option to proceed to court if Adjudication was not favorable to you.

Need Help with Debt Collection?

Contracts Specialist can help you with Debt Recovery and Security of Payments. We will guide you through the whole process and explain where you stand legally.

Get expert legal advice from our principal lawyer, John Dela Cruz. With his extensive knowledge and significant experience dealing with construction law matters, you can be confident that you are in the good hands.

Ready to get the right legal advice now?

You can be confident that you are getting the right legal advice.

Contracts Specialist is a Sydney-based construction law firm that deals with Building DisputesConstruction Contracts, Debt Recovery, and Security of Payment. With Contracts Specialist, you are ensured that you are in good hands.

Contractors Debt Recovery – Security of Payment
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Contractors Debt Recovery – Security of Payment