Collections

Most people, when faced with the prospect of legal proceedings relating to a debt which they acknowledge as due and payable, will pay their account. They realize that when a matter is referred to legal counsel, their creditor has run out of patience and is serious about collecting the account. The principle is simply that debtors take communications from a lawyer much more seriously than from a receivables clerk or collection agency.

Effective debt collection must also bear in mind the nature of the debtor. A valued client or customer must be treated with deference and respect. A client who has proved to be difficult must be dealt with harshly. The tools available to legal counsel vary from a politely worded letter which suggests a response is appropriate, to a court order which will remove the debtor's funds from his or her bank account before they are even aware of your claim. The purpose of this brochure is to provide you with basic information regarding the collection process and advise you of our fees in relation thereto.

It is always wise to try to settle a matter before proceeding with an action in the courts. Many times simply a letter or a phone call from a lawyer will prompt the payment of an overdue account. We also recommend forwarding an unfiled copy of the claim before commencing the action. The reasons for this are twofold. One, you are sending a message that only a simple procedural step lies between them and a court case (ie: the filing of the claim) and two, sometimes the debtor does not realize the claim is not filed and pays the account, thus avoiding the cost of filing fees at the Courthouse.

Actions in Small Claims Court are much more cost effective than actions in Queen's Bench because there are far fewer procedural rules to comply with. Once a defence to the claim is filed the matter is simply set for trial. The jurisdiction of the Small Claims Court was recently increased from $4,000.00 to $7,500.00, making it much more suitable for the collection of small debts. Generally speaking, neither party is entitled to their legal costs even if they are successful at trial.

Queen's Bench is the superior trial court within the jurisdiction of Alberta. Any action may be commenced there regardless of the amount claimed. Procedures in Queen's Bench are much morecomplicated than in Small Claims Court. A discussion of these procedures is far beyond the scope of this brochure, however there is a common trail through which all actions proceed.

An action is commenced when the Plaintiff files a statement of claim. The Defendant, if he so chooses, will file a statement of defence to the claim. A document exchange then occurs, during which each party is obligated to produce all of the documents in their possession which relate to the matters in the issue. This gives each party the opportunity to see what type of written evidence the other has.

After the document exchange occurs oral discoveries are then scheduled. During this proceeding each party to the action attends with their lawyer and each is subject to questioning, under oath, by the other lawyer. A court reporter attends, who is responsible for making a verbatim transcript of everything said.

This transcript, in conjunction with the written evidence, completes the discovery process. Once discoveries are completed, and subject to some other preliminary procedures, the matter is scheduled for trial. At the present time, if a case is not exceedingly complex, the time between when you first attend in a lawyer's office and the time of trial is approximately one and a half to two years.

If you are successful in your claim, the Judge will likely award you your costs of the claim. At the present time, the Alberta Rules of Court provide for a tariff which compensates you in relation to each step you are required to take in bringing your claim to completion. Presently the rules compensate you for approximately one half of your actual legal fees. You are also entitled to be reimbursed in full for disbursements incurred while pursuing your claim. These include items such as court filing fees, photocopying, etc.

As trials are often expensive and unpredictable, every effort should be made to resolve a file before proceeding to trial. Sometimes all it takes to settle a matter is a telephone call and a little flexibility. There are a number of critical times in every lawsuit when the case may settle. They are as follows:

1. before the statement of claim is filed
2. after the statement of claim is filed and served;
3. before and after discoveries; and
4. before and during the trial.

If a debtor ignores a statement of claim when they receive it, the creditor can obtain what is called a default judgment. Once a default judgment is obtained, it is just as effective as a Judge's order saying you have won your case. All of the remedies available at law, such as seizure of assets and garnishment (discussed later), can then be used to collect the debt.

A consent judgment is a judgment which is obtained by agreement of the parties. It can be obtained at any time during the proceedings after the statement of claim is filed. Its primary use is as an enforcement mechanism to require a debtor to adhere to an agreed upon payment schedule. The judgment is held by the creditor and not filed unless the debtor defaults on the payment schedule. When filed, it is just as effective as a Judge's order and, as noted above, collection proceedings may then follow for the full amount owing.

Once you have obtained a judgment, a "writ" can be filed at the personal property and land titles registries. A writ is a document which says that you have a judgment against a debtor for a certain amount. Once the writ is filed at either of these registries, it will "attach" to any assets of the debtor registered there. The effect of this is that anyone wishing to purchase the assets of the debtor will want the writ cleared off before they purchase them, thus preventing the debtor from selling the assets without first dealing with your judgment

There are a number of other procedures available to enforce your judgment. They are as follows:

1. seizure of assets;
2. garnishment;
3. sale of land; and
4. examination in aid of execution.

The writ also allows you to instruct the bailiff to seize and sell the assets of the debtor; for example, machinery, shares, cars, tools, or household furnishings. After payment of the bailiff's fees, as long as there are no other writholders or secured creditors, you are entitled to use the sale proceeds to pay your judgment (and costs, if awarded).

Garnishment is a procedure whereby a creditor who has obtained a judgment (referred to as a "Judgment Creditor") may remove funds from a debtor's bank account or collect funds which are owing to the debtor from almost any other source. A "garnishing order" may also be served on the debtor's employer, compelling it to pay a certain portion of the debtor's wages into court for payment to you. As a result of recent amendments to the legislation, these orders are effective for a period of one year. If the debtor has any funds, this is likely the most effective means of enforcing your judgment.

Recent amendments have also greatly streamlined the process by which a Judgment Creditor may sell a debtor's land. Put very simply, a series of notices are now served on the debtor and a realtor is then hired to sell the land. Once a purchaser is found, the transaction is completed, the mortgage paid off, and you are entitled to the balance of the funds (as long as no one else has registered a writ against the property). If there are other writholders, then you will share the sale proceeds with them. A court application may be necessary if the debtor files an objection to one of the notices.

This procedure is utilized where you have obtained a judgment but have not been able to locate any assets of the debtor. It allows you to subpoena the debtor to attend to be examined under oath regarding his assets. Once you have determined what his assets are, you may then proceed with seizure or garnishment to collect the debt.

Our services are available either on a contingency fee basis, which fee is based on the value of the debt and is contingent upon collection, or on a fee for service basis, in which case our fees are payable regardless of whether or not the account is collected: The advantage of the contingency fee arrangement is that if there is no collection, there is no fee, only disbursements. The disadvantage is that if the collection is effected with a minimal amount of effort, then our fee may be disproportionate to the amount of debt collected.

FEE FOR SERVICE

Under this option you would pay for the lawyer's time on an hourly basis. Our lawyer's rates depend on their level of expertise and experience. If you would like to retain us on this basis, we will evaluate your claim and, with your agreement, assign the most appropriate lawyer to your file.