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Debt Collection News


Released every month our debt collection blog contains news, stories and tips to keep you informed.

Repo man has his hand run over

Wednesday, June 08, 2011 - Posted by Philip Harvey

In the Pennsylvania, US, a repo man was attempting to load a vehicle onto a roll back tow truck. In an attempt to stopthe repo man, the debtor allegedly moved the car intentionally running over the repo mans hand.

Police have charged the debtor with simple assault. It is not known how badly the repo mans injuries were.


Debtor causes more damage than owing

Wednesday, May 25, 2011 - Posted by Philip Harvey

A car dealer who was owed $14,000 by a debtor on a Ford Falcon spotted the vehicle in the Ugly Duck restaurant car park, in New Plymouth, New Zealand. The car dealer immediately phoned his repossession agent and the police. 

When the debtor returned to his car, he found the car park entrance blocked off by the car dealer who was demanding the car back. The debtor entered the vehicle and locked himself inside. 

A repo agent then arrived and used his vehicle to also block part of the car park entrance. 

The debtor then proceeded to drive the Falcon at full speed into both cars causing significant damage to both cars and a Jaguar which was parked in close proximity.

The repair bill for all vehicles involved has been estimated at $35,000.

The debtor was arrested and will face charges


PPSR New Zealand examples Debt Collection

Wednesday, May 11, 2011 - Posted by Philip Harvey

An example of PPSR in action in New Zealand which is similar to the Australian legislation commencing in October 2011.

SEGARD MASUREL (NZ) LTD V NICOL & ORS HC AK CIV 2007-404-003603 [2008]

Wool was delivered on 5 September 2006 in three batches under 3 different invoices. Payment was not made at the time of delivery. Segard made inquiry the following day as to the reason why payment had not been made and was advised by the Financial Controller of Feltex, that payment had been temporarily delayed as the ANZ Bank in Australia would not authorise any payments at that time. He was given an assurance that payment would be made by Feltex as soon as possible

Several days later, payment had still not been made.  Feltex was contacted and a "personal guarantee" was provided by the head wool purchaser of Feltex that Feltex would not touch the wool delivered by the Segard and would keep it separate from the rest of the wool in storage until payment had been made. Segard felt reassured and it had influenced them not to take steps to repossess the wool immediately. In addition, payment was received from Feltex on 15 September 2006 in respect of the wool that had also been delivered on 5 September (another of the batches).

Feltex had been placed in receivership by ANZ National Bank Ltd and Australia and New Zealand Banking Group Ltd who held a debenture over all of Feltex's assets. Both had registered financing statements on the Personal Properties Securities Register under the PPS Act in respect of the security interest created by the composite debenture.

The Receivers refused to return the wool to Segard despite demands and application was made for summary Judgment in the District Court. The value of the wool was $180,000 (NZD).

In Segard submission they emphasised the trading terms of Cash on Delivery. Invoices would normally be issued for the wool up to one week before it was to be delivered. Payment was then generally made by Feltex on the same day as the delivery. Generally payment was actually made 1-3 days later.

The District court ruled against Segard with the judge stating "by tacit agreement or actual agreement credit was effectively given to the company". The Judge had difficulty with the appellant's proposition that notwithstanding what had occurred, on the facts, the payment of cash on delivery remained the effective intention of the parties. The district court judge then looked at if title had not passed there would have been a conditional sale creating an interest under the PPSA (NZ). As Segard had not registered its interest under the PPSA it came behind the registered interest of ANZ.

In appealing to the Supreme Court, the Judge found; 
- The course of dealing between the parties shows that the appellant apparently did not usually insist on concurrent payment, and it did not do so on this occasion.
- When the Segard did not insist on payment on the date of delivery of the wool, it effectively demonstrated an intention to grant credit if the goods were delivered, without requiring payment.
- Upheld the District Courts ruling that the conditional sal created an interest under the PPSA (NZ) and Segard should have registered its interest.

The cost of registering interest in the PPSA in New Zealand is approximately $3.00 The loss before court costs & solicitors costs to Segard as a result of not registering their interest was $180k (NZD).


Repossessed car falls off back of tow truck

Tuesday, May 10, 2011 - Posted by Philip Harvey

A tow truck driver in South Carolina who was repossessing a 1999 Lexus 300 is accused of failing to secure his load correctly. When crossing a train crossing, the vehicle allegedly bounded off the hook of the tow truck. The vehicle was stranded on the train tracks.

The crossing gates came down and a train en route to New York from New Orleans approached. The vehicle was smashed by the train, sending the vehicle off the tracks and writing it off. The train sustained only minor damage with no reports of any injuries to passengers or crew.

The police quoted that "repo trucks often try to get in and out as quickly as possible before fully securing vehicles”.

The tow truck driver is reportedly accused of failing to report an accident and hit and run for fleeing the scene of an accident with property damage and cited for improper towing.

The driver maintains his tow truck stalled on the tracks and he unhooked the car but police do not believe this story.


Using the Legal System to collect debts in New South Wales

Friday, April 01, 2011 - Posted by Philip Harvey

This is the second article in a series where we will go through using the Legal System to Collect Debts in all States and Territories. Previously we have compared specific legal actions between states and territories. 

Included in this is a workflow to assist in the understanding of the process. The workflow is located after the article. You may also like to download a copy of this workflow for you own records. A link for the download is at the end of this article.

Statement of Liquidated Claim 

After expiry of default notice the initiating action in the Local Court is a Statement of Liquidated Claim (also referred to as a SLC).

  • Can be served via post or in person

  • Can apply for Judgment 28 days after service

*Costs between $434.60 to $1,029.00  depending on amount

This can be compared against the other states and territories here.

 

Judgment

  • This action formally registers the debt with the court and allows further collection action.
  • Judgment stands for 12 years.
*Obtaining Judgment costs between $105.20 to $263.00 depending on amount of claim (undefended)


This can be compared against the other states and territories 
here.


Once Judgment granted then 4 choices of enforcement proceeding are possible.


Oral Examination

  • This is used where you are unaware of Debtors Assets, Employment.

  • Examination Notice must be issued first and not returned for 28 days prior to applying for an Oral Examination.

  • Documents are personally served on the debtor to attend court.

  • Hearing is conducted by the Registrar and debtor must provide details of income expenses and assets.

  • If debtor doesn’t attend then you can apply for an arrest warrant.

This can be compared against the other states and territories here.

*Cost is $482 for the Court Application + preparation and attendance charges (unable to quantify)  (undefended).


Garnishee Order.

  • Two types - Garnishee Order for Debts or Garnishee for Salary / Wages

  • Must know the financial institution details or employers details

  • documents are served on the financial institution or employer

  • Garnishee for Debts - Financial institution advises of amount garnished (if any). There are protected monies (Centrelink Benefits) that you may not received. This is a one off payment unlike a Garnishee for Salary / Wages

  • Garnishee for Salary / Wages - Employer remits all amounts over the Weekly Workers Compensation Amount ($409.10 as at January 2011) within 14 days and for as long as debtor remains employed / debt satisfied.

  • Garnishee for Salary / Wages - Debtor can attend their nearest local court and lodge a Garnishee Instalment order to reduce the amount paid. Needs to justify this to the registrar with supporting income, expenses, assets & liabilities.

*Cost can vary from company to company. LCollect charge under $100.

This can be compared against the other states and territories here.

Writ

  • Sheriff attends property of debtor to demand payment and tag any assets of value.
  • If payment cannot be made goods to the value of the debt are seized and sold.

  • Debtor can lodge an instalment order to stay the action

*Cost is $305.00 depending on amount of Claim (undefended)

This can be compared against the other states and territories here
 

Bankruptcy

  • Judgment must be obtained then a bankruptcy notice served.

  • Once Bankruptcy notice has expired then Bankruptcy can be applied.

  • Once bankruptcy obtained all debts owed by the debtor are captured under the Bankruptcy.

*Cost is a minimum of $2500.00 if matter is undefended (after Judgment costs)

 

* Important Note: All costs are estimates as at 20/04/2011 and do not include costs of counsel and preparation for hearing.


Lessons to Learn from the NSW State Governments Debt Collection

Friday, April 01, 2011 - Posted by Philip Harvey

The new NSW government revealed that the state was owed over $1 Billion in unpaid fines. State Finance Minister Greg Pearce was highly critical of the Office of State Revenue for failing to enforce the payment of penalties.

The State Debt Recovery office details the enforcement process on their website which can be found here.

What Collections lessons can we all take from this?

Looking at the recovery process we believe the State Debt Recovery Office (SDRO) processes are falling over once RTA restrictions have been imposed. Should you note pay your parking fine / infringement notice, upon expiration of an Enforcement Order, the SDRO will suspend your license, cancel your registration and impose customer restrictions on your account. Most people pay their fines before this point. Those that do not drive on our roads unlicensed and unregistered (an insurance liability nightmare itself).

The Other sanctions after the RTA restrictions have been imposed allow for a Property Seizure Order, Garnishee Order, Examination Summons and Charge on Land.

If a debtor has the capacity to pay, these Other Sanctions will gain payment if used effectively. It is our opinion that this is where SDRO is falling over. The reasons for this could be;
- insufficient staff to pursue these avenues
- lack of knowledge on how to use these collection tools
- not prepared to spend any money to use these collection tools.

There are many ways to correct these reasons including training, employing more staff or outsourcing.

In this SDRO instance, the minister has indicated they will look at outsourcing this to specialist debt collection agencies.

Key Points for your organisation;
- examine your arrears portfolio
- identify non-paying sections of your portfolio
- look at available enforcement options
- review the resources available to your organisation to effectively enforce your debts.

Lessons to Learn from the NSW State Governments Debt Collection

Friday, April 01, 2011 - Posted by Philip Harvey

The new NSW Government revealed that the state was owed over $1 Billion in unpaid fines. State Finance Minister Greg Pearce was highly critical of the Office of State Revenue for failing to enforce the payment of penalties.

The State Debt Recovery office details the enforcement process on their website which can be found here.

What debt collection lessons can we all take from this?

Looking at the recovery process we believe the State Debt Recovery Office (SDRO) processes are falling over once RTA restrictions have been imposed. Should you note pay your parking fine / infringement notice, upon expiration of an Enforcement Order, the SDRO will suspend your license, cancel your registration and impose customer restrictions on your account. Most people pay their fines before this point. Those that do not drive on our roads unlicensed and unregistered (an insurance liability nightmare itself).

The Other sanctions after the RTA restrictions have been imposed allow for a Property Seizure Order, Garnishee Order, Examination Summons and Charge on Land.

If a debtor has the capacity to pay, these Other Sanctions will gain payment if used effectively. It is our opinion that this is where SDRO is falling over. The reasons for this could be:
  • Insufficient staff to pursue these avenues
  • Lack of knowledge on how to use these collection tools
  • Not prepared to spend any money to use these collection tools.

There are many ways to correct these reasons including training, employing more staff or outsourcing.

In this SDRO instance, the minister has indicated they will look at outsourcing this to specialist debt collection agencies.

Key Points for your organisation:
  • Examine your arrears portfolio
  • Identify non-paying sections of your portfolio
  • Look at available enforcement options
  • Review the resources available to your organisation to effectively enforce your debts.

Western Sydney Based Credit Union Testimonial

Monday, March 28, 2011 - Posted by Michael McCulloch

[Credit Unions & Mutuals]

Advice and service is always professional yet friendly.

Collections Manager

Inner West Sydney Based Credit Union Testimonial

Friday, March 25, 2011 - Posted by Michael McCulloch

[Credit Unions & Mutuals]

I am happy with the "all round debt collection" service that LCollect provides.

Collections Manager


Trustees Re-Directing Payments

Tuesday, February 01, 2011 - Posted by Philip Harvey

We have had a couple of instances over the past 3 months where debtors have redirected there payments to the proposed registered Trustee at the direction of the proposed registered Trustee & advising us they are making a Part IX application. It is an important point that a Trustee who is registered with ITSA does not become the Trustee of a debtor until an Act of Bankruptcy has been submitted.

When our team performed searches for the bankruptcy, there is was record.

This raised alarm bells within our Collections team & further investigation was required. Reviewing the time line of the debts & after speaking with the proposed registered Trustees we learnt the following;

    • Payments had been redirected for over 3 months. In one instance the payments to the Trustee were going to total $1,500 by the time the payment plan was going to be completed.

    • The Trustee had had no intention of filing the Part IX Agreement in the immediate future (this is a contentious point that a Trustee would argue). These payments were not going to be distributed to creditors.

    • In one instance when we reviewed the debtors assets & liabilities it was startlingly obvious to us that a Part IX agreement would never be accepted with the debtor having "negative" capacity to live, before taking into consideration outstanding debts.

    • In another instance, our client was the only creditor and we would reject any Part IX Agreement on their behalf as we would happily accept the same arrangement without the Trustee charging there $1,500 (and avoid unnecessarily reducing the payments received by our client)

    Note that we are still able to pursue the debtor for payments as no Bankruptcy had been lodged, yet the debtor was following the registered (proposed) Trustees direction. When advising the debtors of our right to still pursue this debt through the courts, the debtors advise that the Trustee advised them this will be "fixed up" once the Bankruptcy is lodged.

    Our immediate question was what was the debtor actually paying the Trustee for??

    The answer is a "preparation" fee for preparing a Bankruptcy (in this instance a Part IX). The Bankruptcy Act allows for charges for preparing Bankruptcies - however the preparation of a Part IX debt agreement is a simple & straight forward process (we believe the Act was allowing this for complex schemes of Arrangement that are complex & involved).

    We formed the view that this was the Trustee acting very unscrupulously, using the Bankruptcy Act for something that was unintended. The Bankruptcy Act affords little or no protection from Trustees acting in this manner for debtors who do not know how the system works.

    We subsequently phoned ITSA to see if we could register a complaint (in the example where our client was the only creditor), and were advised that only the Debtor could make a formal complaint. In the telephone conversation ASIC agreed & were sympathetic with the points we raised, yet there was nothing they could do. They made the comment that with all the advertising for Part IX debt agreements this was becoming more common.

    Perhaps we will see some reform in this area in the coming years......



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