Debt Collection In South Africa Advantages Of Liquidation

Once all the written documentation has been completed providing proof of all the excuses that companies and closed corporations have made to their creditors regarding why they cannot pay the debt owed, then the way forward to liquidate the company or closed corporation can commence. However, both creditors and debtors need to understand that if there is still a proven disagreement regarding the unpaid money owed by the company or closed corporation to its debtor or debtors then that company or closed corporation is legally not allowed to start the liquidation process. As a typical example, which often occurs in the South African business environment, if there is a dispute related to short delivery or that credit notes have not been passed or other related significant defences, then the company or closed corporation cannot legally start the liquidation process.

In this instance a legal summons must be issued. Assuming that there are no disputes and assuming that the respective party can provide proof that the debtor is unable to pay, then the company or closed corporation can initiate the liquidation process. So what are the advantages that can be achieved from a company or closed corporation that is in debt to its creditors? Firstly it is cost effective for the debtor. If the debtor can agree to a fee with their creditor, resulting in the creditor’s attorney not having to produce and send countless accounts to the debtor and the debtor does not know what the total costs would be this can be cost effective for both the debtor and the creditor. Customarily, one can collect the costs from the debtor, or most of the costs, because the debtor is too afraid not to pay under the auspices of threatened liquidation. The second advantage of liquidation is that of timing and is dependent on the first come first served principle.

This means that those companies and closed corporations or creditors that continue or persist on telephoning there debtors indefinitely, without getting an attorney involved or taking any legal action against their debtor or debtors, are often the creditors who end up completing lengthy claim forms when the company has been placed in liquidation and a meagre dividend is received many years later, due to the recessionary nature that South Africa currently finds itself in. Nevertheless, it is not fair to be prescriptive about when a creditor should to and over a debt collection or debt recovery exercise to an experienced and successful attorney like Ivan Zartz. However, there have been a number of cases where, due to the fact that the respective creditor company is scared of spending company’s money on legal fees, debts are handed over too late and the result is that a meagre dividend is received many years later.

Visit http://ivanzartzattorneys.co.za/debt-collection/ to contact him and his attorneys in Johannesburg to solve your debt collection recovery matters.

To learn more about the legal assistance provided by attorney Ivan Zartz in Johannesburg concerning debt collection and debt recovery visit this link Debt Collection Recovery Collectors South Africa.