If someone does not pay a debt it can be listed with a credit rating agency and may prevent them later getting credit to buy a house or car … or you may find yourself contacted well down the track to clarify what you were owed so it can be belatedly tidied up!

People are getting into trouble for very small sums, on average $390, especially when they are young.

If you are chasing a small debt it is worth reminding the debtor that the debt will be listed on their credit report and can prevent them getting credit in the future.  We were recently instructed by a client who was having difficulty in collecting the outstanding balance of their account.  As the amount was relatively small the client was mindful to write the debt off as the costs of recovering the amount may outweigh the sum owed to our client.  However, the client did not want the debtor to get off scot free so arranged for the debt to be listed on the debtor’s credit report.  After two years had passed the client had given up hope of seeing his money, and was amazed when the debtor telephoned our client to inform him that he applied for finance to purchase a motor vehicle and was told by the finance company that there was a debt owing by him which remained unpaid.  The finance company informed the debtor that they would reconsider his application for finance immediately if he attended to payment of the amount outstanding to our client.  It is therefore very important to act quickly when recovering debts.  Even ones that you feel are past ever being paid can be recovered if the right techniques are used.  Very few are totally irrecoverable.  Do not threaten to list the debt if they do not pay as this can be an offence.  Debt collectors must act within the law when recovering debts.  This means they must obey laws that are designed to protect debtors from misconduct.  Under these laws debt collecting must not:

• Use physical force or coercion (forcing or compelling you do something);
• Harass or hassle you to an unreasonable extent;
• Mislead or deceive you (or try to do so);
• Take unfair advantage of any vulnerability, disability or other similar circumstance effecting you.

Simply tell them that you will be listing the debt on a certain date.  A suggested wording could be: “On [insert date] we will be listing this debt with [insert name] credit rating agency.  An adverse listing may affect your ability to obtain credit in the future such as for a house or vehicle”.  This may encourage payment of a debt that might otherwise not be worth pursuing.

It is worth noting that if your terms of trade correctly include payment of all recovery costs then we can add those to the debt being collected, and make small debts more economic to chase for you.