I have had the experience of being harassed by government creditors. I was a partner in a child minding centre that was wrought with financial issues stemming from a husband and wife partnership. The government body for WorkCover, QBE, were owed money and proceeded to threaten me with a summons to court and the winding up of the business. This was some time ago now, and even though I no longer am partner in the business and the business has been sold, this government creditor continue to call and threaten me. To date I have not seen a summons.
I have a client who couldn’t pay his GST. It wasn’t that he didn’t want to pay GST, it was that his business was on shaky grounds and he couldn’t free up any cash. The ATO caught up with him and, rather than hitting him with a demand for $25,000 which was the GST owed, they hit him with a fine of $22,000 and a total bill for $47,000. If this chap was already struggling then this additional impost was guaranteed to force him out the back door! In the end he had to sell his house for $360,000, a forced sale which surely devalued the amount received. The bank paid out its mortgage of $280,000 and the balance was split between the liquidators and the trustees. The ATO got a fraction.
Bullying and Intimidation by Creditors
In reality, when you owe money, people will threaten you with all sorts of things. The fact is that most business owners don’t go into business to not pay their bills. Stupid threats are not going to change the situation that you simply don’t have the money to pay. It makes absolutely no sense that a person who puts everything on the line to start a business is intimidated when they experience a financial setback, sometimes through no fault of their own. Should we perhaps also intimidate and threaten those on welfare because they are unable to get a job. Where does the bullying and intimidation start and stop?
One of the interesting things I found in my experience in business and with other business owners is the common misconception of “If you don’t pay, I’ll send someone over to break your legs” or similar intimidation tactics. How often this happens in reality is questionable. When it comes to creditors wanting their money, there are two types of intimidating debt collectors that could be sent around. Scary looking people that try to intimidate you, but won’t really do anything, and people who are influenced by drugs and will do just about anything to get their next fix.
Unless you operate in shady circles, it is unlikely that you’ll receive a visit from either of these shady, questionable debt collectors. Common sense prevails that it really doesn’t make sense to break your legs if you owe creditor money. That’s just going to make it more difficult for the creditor to collect his money from you.
In my experience, there was ever only one creditor that I encountered that had the ability to apply common sense and logic to an otherwise doomed situation. A steel company that had got into financial trouble contacted me for assistance. They were unable to pay their creditors and the best solutions were to liquidate the company, recover and start again. When we attended the creditor’s meeting, one of the creditors, who was a major supplier for the company, was at the meeting along with several smaller creditors. It was like music to my ears, on hearing the words from this creditor to my client: “Tell me how I can help”. A few days later, my client received calls from a number of new clients referred to him by the major creditor.
With the help of the creditor he owed a large sum of money to, my client was able to get back on his feet and pay all the money outstanding to his creditor. If you are a creditor, and your client has got themselves into trouble, consider how you can help. Remember, you have more chance of getting your money if you use your common sense and logic, rather than threatening to hurt them or their families, or send them into bankruptcy.