The Debt Recover Plan - Part 1: Your first point of call
February 19, 2026
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Is your business losing money because clients don’t pay on time or at all? Is your debt recovery process failing to recover the money owed to you? If so, Bailiwick Legal can help.
With the new financial year having just commenced and the end of the calendar year right about the corner, this time of the year is a common time for debt recovery action to be taken. However, businesses should be mindful as to the approach taken to recover due and owing monies and the quality of debt recovery assistance sought.
Who are you going to call?
When monies become due, a business’s first point of call is usually to a debt collection agency. The agency may make a few phone calls and send a few emails/letters, but if the debtor still does not pay, the agency will often then refer the business to a lawyer to commence legal proceedings.
So why not engage a lawyer from the start?
There are many advantages to engaging a lawyer from the start to recover the debt:
- The quicker you pursue your debtors, the more likely you are to collect the full amount of the debt;
- There is a limitation period for the collection of debts, after which the debt becomes statute barred, so time is somewhat of the essence;
- Debt collection agencies usually have no ability to commence legal proceedings on your behalf, so they are simply a ‘stepping stone’ in the debt recovery process; and
- You will more often than not have to pay a percentage of the debt to the debt collection agency as a commission for their services, which could end up being more expensive than a lawyer’s legal costs, depending on the circumstances.
At Bailiwick Legal, we have a wealth of experience in debt recovery actions. We can assist you from start to finish and can tailor the process to your specific situation.
First things first – issuing a Letter of Demand
Our first step when recovering unpaid monies is to issue a formal Letter of Demand to the debtor. This can be a relatively inexpensive and effective way of recovering a debt.
The Letter of Demand will be a last written demand for payment of the debt to be made within a specified time period. It puts the debtor on notice that if they fail to comply with the terms of the Letter of Demand, they risk further action being taken against them, including the commencement of legal proceedings.
A Letter of Demand can be effective because it:
- Is a formal written document;
- Is coming from a lawyer;
- Requires strict compliance with the terms therein within a specified time period;
- Notifies the debtor that if legal proceedings are commenced, such proceedings will be listed on the debtor’s credit report which may effect the debtor’s ability to obtain finance; and
- Gives the debtor a final opportunity to pay the debt before further interest and legal costs are incurred, for which the debtor may be liable.
If the Letter of Demand is not complied with, there are a variety of options available to the business to recover the debt.
So, if you find yourself in one of the below situations, get in contact with us to find out how our services can be of benefit to you:
- You have monies that are due and payable to you;
- You have a debt that remains outstanding despite numerous follow ups with the debtor (including from a debt collection agency); or
- Your debt collection agency is advising you that the next step is to commence legal proceedings/seek assistance from a lawyer.
If you would like further information in relation to how the above matters may affect your business, please contact us on (08) 9321 5451 or by email at danielle@bailiwicklegal.com.au.
For further information about our legal services, please visit our website: https://www.bailiwicklegal.com.au/
The above information is a summary and overview of the matters discussed. This publication does not constitute legal advice and you should seek legal or other professional advice before acting or relying on any of the content.

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