When peo­ple tell me that they are owed mon­ey and ask me what they can do to recov­er that debt, I can only tell them half the sto­ry. The oth­er half of the sto­ry only they can tell me.


My half of the story

The legal sys­tem pro­vides a num­ber of mea­sures to enable you to try to recov­er a debt owed to you once it has fall­en due.

Gen­er­al­ly speak­ing, if you have exhaust­ed all attempts to recov­er the debt by beg­ging, cajol­ing and send­ing threat­en­ing let­ters, you will need the assis­tance of the court.

You will have heard terms such as state­ment of claim, statu­to­ry demands, wind­ing up appli­ca­tions, writs, gar­nishees, bank­rupt­cy notices and so on. Each of these pri­ma­ry debt recov­ery tools has its own pros and cons and chances of suc­ceed­ing. Which is the best one for you will depend on the cir­cum­stances of your case.

Any lawyer worth their salt knows these mea­sures like the back of their hand. This is the half of the sto­ry that I can tell you.

Your half of the story

Your half of the sto­ry is the answer to my ques­tion — what mea­sures have you tak­en to help your­self recov­er this debt? 

Con­sid­er one spe­cif­ic exam­ple: you com­mence court pro­ceed­ings to recov­er a debt against a com­pa­ny and dur­ing that process the com­pa­ny is placed into admin­is­tra­tion or liq­ui­da­tion. This will dra­mat­i­cal­ly reduce your chances of recov­er­ing your debt. If you are an unse­cured cred­i­tor, you will be forced to line up with all the oth­er cred­i­tors and accept what­ev­er cents in the dol­lar are final­ly paid to cred­i­tors by way of a div­i­dend. Usu­al­ly this is zero. There are many oth­er such examples.

Here are five mea­sures which you can take to pro­tect yourself:

Com­pre­hen­sive cred­it check

  • An obvi­ous pre­cau­tion is to do a com­pre­hen­sive cred­it check before you do busi­ness with any com­pa­ny. This is the most basic pro­tec­tion against future bad debts. It can help you decide what terms of trade to extend and whether you want to do busi­ness with the com­pa­ny at all. Sur­pris­ing­ly, many com­pa­nies omit this sim­ple step.

Insert a clause in your terms of trade

  • A prop­er­ly draft­ed clause in your terms of trade allows you to place a caveat over a com­pa­ny or the prop­er­ty of its direc­tors if the com­pa­ny does not pay its debts.

Reten­tion of title clause

  • Hav­ing a prop­er­ly draft­ed reten­tion of title clause on your invoic­es will enable you to recov­er the goods you sup­plied to the com­pa­ny if some of those goods were not paid for. With­out such a clause, those goods may well be sold and the pro­ceeds used to pay all creditors.

Direc­tors’ per­son­al guarantees

  • You have the right to insist that the direc­tors of the com­pa­ny give you per­son­al guar­an­tees as a con­di­tion of doing busi­ness with you. This will mean that you have access to their assets if the com­pa­ny has none.

Secu­ri­ty over an asset

  • You have the option of tak­ing secu­ri­ty over an asset of the com­pa­ny by a charge or some oth­er means of secu­ri­ty. This will enable you to seize the prop­er­ty which is the sub­ject of the secu­ri­ty, rather than wait­ing in the queue with the oth­er (unse­cured) creditors.
Fore­sight is bet­ter than hindsight

These and numer­ous oth­er mech­a­nisms can make it eas­i­er for you to recov­er debts when they fall due. But what I can­not stress enough is how impor­tant it is to act in advance, before trad­ing starts or before the debt falls due, to give your­self the best pro­tec­tion you pos­si­bly can.

Deci­sive pre-emp­tive action is by far your best bet when it comes to recov­er­ing the mon­ey that you have worked so hard to earn.

Ter­ry Sper­ber’s arti­cle on ways to recov­er debts first appeared on the web­site of My Busi­ness Magazine. 

For fur­ther infor­ma­tion please contact:

If you would like to repub­lish this arti­cle, it is gen­er­al­ly approved, but pri­or to doing so please con­tact the Mar­ket­ing team at marketing@​swaab.​com.​au. This arti­cle is not legal advice and the views and com­ments are of a gen­er­al nature only. This arti­cle is not to be relied upon in sub­sti­tu­tion for detailed legal advice.

Publications

Arti­fi­cial Intel­li­gence Fol­ly Called Out by Fair Work Commission

In the recent Fair Work Com­mis­sion deci­sion Mr Bran­den Dey­sel v Elec­tra Lift Co.[2025] FWC 2289, Deputy Pres­i­dent Slevin applied a crit­i­cal…

Assess­ing Scope 3 Emis­sions: An analy­sis of the impli­ca­tions of Den­man Aberdeen Muswell­brook Scone Healthy Envi­ron­ment Group Inc v MACH Ener­gy Aus­tralia Pty Ltd [2025] NSW­CA 163 (the Mount Pleas­ant decision)

Intro­duc­tionOn July 24, 2025, the New South Wales Court of Appeal (NSW­CA) deliv­ered a land­mark rul­ing in Den­man Aberdeen Muswell­brook Scone…

Work­place Rela­tion­ships: The Legal Posi­tion (Cold­play Con­cert Edition)

The recent sto­ry of col­leagues (a Chief Exec­u­tive Offi­cer and Chief Peo­ple Offi­cer (CPO)) whose appar­ent rela­tion­ship was cap­tured on…

In the News

Michael Byrnes is quot­ed in the arti­cle, Fair Work warns lit­i­gants against using Chat­G­PT”, pub­lished in The Aus­tralian on 28 August 2025:

Michael Byrnes is quot­ed in the arti­cle, ​“Fair Work warns lit­i­gants against using Chat­G­PT”, pub­lished in The Aus­tralian on 2…

Con­grat­u­la­tions | Angela Har­vey & John Trinh for being recog­nised in 2025 Doyles Guide Rankings

We’re proud to announce that Angela Har­vey has been recog­nised in the 2025 Doyles Guide as a:Rec­om­mend­ed Lead­ing Estates Lit­i­ga­tion Lawyer…

Michael Byrnes appeared on Nights with John Stan­ley on 2GB and 4BC on 25 August 2025 to dis­cuss the legal aspects of work­place surveillance

Michael Byrnes appeared on Nights with John Stan­ley on 2GB and 4BC on 25 August 2025 to dis­cuss the legal…

Sign up for our Newsletter

*Mandatory information