Dooley Blog

Anyone who has applied for any form of credit over the past seven years, has a credit file. Your credit file records details of the credit you have applied for, it’s purpose and the amount of credit you’ve applied for during that time. It outlines any payment defaults, personal information and information relating to things such as bankruptcy and the like. A good credit rating along with a steady income are essential factors in obtaining loans, credit cards, interest free retail offers and even securing a rental property.

The credit rating agencies obtain information about your financial history from multiple sources, including you.
The information in your credit file dictates your credit risk which banks, retailers and other credit providers will check prior to deciding if they are prepared to lend you money or give you credit. The providers have their own methods of assigning a credit rating to you from the data held depending on their own profiling of clients.

If you have a negative credit rating brought about by overdue accounts or defaults, fraudulent use of your credit card, or incorrect information in your credit file, it will be very difficult to borrow money.  You may not qualify for a loan or may have to pay a higher interest rate or put down a greater deposit or bond in order to qualify.

Often, if you do not pay an account with a service provider, your credit rating is at risk. Irrespective of other recovery methods and whether you eventually pay the account the service provider may still have reported a default on your credit rating.  This default will stay on your file for between 5 and 7 years. Even if you subsequently pay the amount, your file will reflect that you have defaulted in the past but it has since been paid. Repairing a bad credit rating is far more difficult than maintaining a good credit rating.

If you find yourself in a situation where you have incurred a cost but now have difficulty paying the amount due, keep the communication channels open with the creditor. Don’t dodge the debt or their contact with you. Consider your options and the potential outcomes of each option before the matter goes too far. When many people find themselves in financial difficulty their first instinct is to stop communicating. This often makes creditors nervous and more likely to act harshly against the debtor. Often once something is entered onto your credit file it is very hard to remove

If you find yourself in a situation where you feel your credit rating may be at risk here are five (5) tips to help you out:

1. Check to ensure your credit report is accurate.If it is not contact the credit rating agency and rectify the situation urgently.

2. Select the autopay option for your monthly or regular bills to avoid costly oversights.

3. Consider voluntarily including information on your credit file which will reflect positively on you – ie marital status, length of continuous employment etc.

4. If you have multiple debts, take some professional financial advice and consider a facility such as a debt consolidation loan before your ceditors move against you.

5.  If you have signed up as a guarantor for someone else keep tabs on their payments to avoid a default against you for someone else’s tardiness.

Whether you owe the debt or are owed the debt, we are here to help you with your debt management and recovery issues. Here are some useful tips on how to go about approaching your debt recovery issues.

1. Know the details

First and foremost it is crucial to know the details of your issue, what you need help with, what you want to achieve and ideas about how you will achieve it. Important details may include, but are not limited to:

- How much is the outstanding debt?
- How did the debt come about?
- Is there a written contract?
- Who are the Parties?
- What are their names?
- Where do they live or conduct their business?

Due diligence on your part will ensure that you can provide us with as much detail as possible in order to help solve your problem/s quickly and efficiently.

2. Substantiate the details

Knowing all the details is only one part of the process; you must also be able to prove the details. Proving the details includes, but is not limited to, providing us with evidence to show that a debt exists, how it came about and identify the correct parties involved. Evidence of a contract between the Parties, whether it be written or verbal, is the best way to show that a debt exists, how it came about and the correct parties involved. Evidence may be in the form of an executed contract, some form of written agreement, correspondence, receipts/invoices, transaction records and the like.

3. Think commercially

It is important for you to know what you want to achieve and have ideas on how you will achieve it. In going about such a task, it is vital for you to understand that your “principles” are only one factor which needs to be considered when deciding to commence debt recovery action or deciding to defend against it. Indeed, principles are not always the most relevant factor.

We always urge our clients, depending on their particular circumstances, to think commercially. This means, among many other things, to consider the commercial viability of commencing legal action to recover a debt or defend against such action.

We maintain that it is not best practice to throw good money after bad, particularly if at the end of the day you will be spending an equal or even at times, a greater amount of good money, to recover the debt. Litigation is a very risky avenue to pursue. It can be very time consuming, stressful and costly. You must think carefully about the real possibility that the money you put in may well outweigh the money you ultimately attain from the proceedings. It may be the case that the best commercial outcome would be to settle the issue amicably with the other Party outside of Court. Alternatively, it may be the case that the best solution is to simply pay the debt or simply cease from pursuing it altogether.

4. Be practical and open minded

It is very important to be realistic, practical and open minded in your approach. We do not always have a magic solution or a quick fix to your problem/s, and we certainly cannot read our clients’ minds. You have to understand that the success of your matter is largely dependent on your preparedness and the instructions you provide us. The more detailed your instructions the better. Therefore, when providing instructions you must ensure that you do so clearly and practically. Keep an open mind and have realistic expectations. Implementing such strategies will ensure that you are flexible and achieve the best result in your circumstances.

5. Take the initiative

Make sure you utilise our services as effectively as possible by being prepared. It may be as simple as preparing set questions that you want answered at a meeting, making sure you know all the facts of your case, or drafting your own factual chronology. Efforts like this ensure that your matter progresses efficiently, which also keeps your legal costs to a minimum. The more work you do, the less we have to do and hence the less you are charged.

6. Get well informed

It is always worthwhile to seek professional legal advice in order to work out the best course of action for your situation. The reality is that each matter is different and unfortunately there is no generic piece of advice or universal approach. The most prudent course of action is to seek and take advantage of quality legal services and take the time to understand the various legal options available to you and the legal processes involved in your situation. Only then can you make an informed decision that best suits you.

If you want to get well informed in relation to your debt recovery issue, please do not hesitate to contact us so that we can assist you reach your desired solution.

Stay tuned for our top tips to help avoid bad debts.