We have been inundated with questions and queries on debt collection in these trying times.
What should we do? Is it fair? How long with this last? How do we pay for other things?
As with any legal answer “it depends”. It depends on the schemes finances – if they need money and some aren’t paying then the rest will have to raise the deficiency?
It depends on whether the scheme has sufficient reserves?
It depends on the personal circumstances of each case. Lot 1 hasn’t paid levies for 2 years whereas lot 2 just lost their job on Monday and will struggle.
It depends on so many twists and turns, and we all have a social responsibility to look out for each other, as that is the Australian way. But we also don’t like those that take advantage of a situation for their own benefit at the expense of others. Many of our neighbours and friends will be affected by the shutdown of air travel, tourism, hospitality, sports, arts and non-essential services (including law firms). Patience and compassion should be extended to people genuinely affected by the Covid-19 containment measures.
We have thought long and hard on what is the best approach to make it fair and reasonable for those with monetary issues and those that may not, what is the best balance?
There are basically 3 categories that constantly come up and below we make suggestions on what to do and what to consider:
- All existing debt recovery actions. This is where owners were already in debt collection for levies owed to the scheme before any of the Covid-19 issues really hit home.
These matters are generally already before the Courts and the Courts have advised that they will continue to their natural end except for extenuating circumstances.
Therefore the recommendation here is that schemes should continue with these claims.Whilst some may rely on the Covid-19 virus the issue remains that they were in debt collection well before and in reality nothing has changed.
- New debts that were in transit from schemes to debt collection. This is where the debts were not being paid before the Covid-19 crisis hit and the process of recovery had commenced but not necessarily before the Courts (reminders sent, final notices sent etc as most are over 60 days in arrears).
These will be the most difficult as part of the balancing act.As they are well down the path of recovery schemes will need to consider their own financial needs compared with allowing aging debtors to accumulate. In these instances schemes should consider in the main to continue with the debt collection unless extenuating circumstances are warranted and Covid-19 may not be as relevant to that extent.
- All new debts that are less than 60 days in arrears are probably the easiest to make a decision on. Where lot owners have requested leniency, we recommend owners consider each matter on a case by case basis, remembering always that if one cannot pay the rest must pay the difference.