Sometimes, Debt Collection can be a straight route. Invoices are rendered for goods/services. There is no issue the goods/services were provided. The debtor does not contest the quality of the services/goods. Claim, summary judgment, and hopefully a debtor who will pay up once you have the judgment. A key question in any debt collection case upfront, is whether it is worthwhile to chase the debtor. Is it worth the time, money? Does the debtor have any income/assets? Will the debtor have any income assets in the foreseeable future? Apart from this key concern , the Debt Collection highway is not always linear leading straight to collection.
Sometimes the Debt Collection Highway has twists and turns. Lawyers must navigate these twists and turns to keep the prospects of actual debt recovery reasonable. Some of the matters that may arise along the highway requiring careful navigation include:
@ Do we have a debtor bent on not paying the debt with a talent for moving assets? Fraudulent Conveyances? Need for Mareva Injunction?
@ There may be many creditors vying for a piece of any pie left. Priority of Creditor issues?
@ Does the debtor have any interest in the subject assets/funds or are the funds really trust funds for someone else?
@ Is it the type of debt that will survive bankruptcy if the debtor decides to file for bankruptcy? What is the likely disposition on an application for discharge from bankruptcy? Conditional discharge? Absolute discharge? Is there anything in the bankrupt estate that it is worthwhile following up on and filing a proof of claim with the trustee? Not all bankrupts get absolutely discharged. Some debts survive bankruptcy and sometimes bankrupts are conditionally discharged requiring further payments for the benefits of creditors as a condition of discharge
@ Do we have enough information on the debtor? Examination in aid of execution? Private Investigator?
@ Do we have enough time to launch the claim against the debtor? Limitation Period?
@ Is this really a debt owed by the debtor or by a corporation? Can the corporate veil be pierced?
@ Is there potential Oppression remedy claims under the Ontario Business Corporations Act?
Some of the above issues may never arise on a debt collection matter. In other matters, the debt collection case may have some of these issues and others. The above list is not exhaustive.
Although some debt collection highways are straight with little obstacles to navigate, many others require proper expertise to keep the prospects for actually collecting on the debt alive. A steer down the wrong detour can waste time and money and give the debtor the momentum he or she or it needs to gain distance on the Creditor’s realistic prospects of collection.*
William Poulos, Barrister
* This blog is not a substitute for legal advice. Should you require legal advice a lawyer should be consulted to advise on the specific circumstances of your case.