Recovering a Secured Debt

MSI - SECURED DEBTBy Andrew Mitchard, Johnston Withers, Lawyers, Adelaide

The recovery of secured debts is normally a basic process. However, if you miss a step in the process, it can sometimes cause significant delays.

The first thing to determine is whether you have to provide formal demand for the debt. In most cases this will be necessary. Cases where it will always be necessary would be debts associated with real estate assets, or any consumer contract. Notice in the correct form must be provided to the debtor. This is usually a document which needs to be either served personally on the debtor or in many cases it can be served by registered post or service on the security address or in some circumstances, on the asset.

In the case of real property, the amount of notice can be determined not only by the contract but also by legislation. For example, in the case of residential property there is usually a minimum one month notice period in most States.

Once appropriate notice has been given the asset can be seized in many cases. In some cases, such as residential property, an Order may be required from the Court to eject the owner from possession. These proceedings need to be taken in a State where the asset is held. Orders are often also needed in the case of commercial property, although other options might be available under the contract, such as the appointment of a receiver or manager in some circumstances.

It is very important to have proper advice before making any attempt to recover a debt over a secured asset. It is also important to make sure that you have appropriate advice from the State in which the asset is held to make sure that all regulatory matters are dealt with.

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