When hard times hit you or your business, the first sign of impending problems is probably a 'letter of demand' from a legal firm or a debt collection agency.

Debt collection agencies generally receive a percentage of the debt collected by it.

Solicitors are not entitled to a 'commission', but charge their client normal legal fees. If you are responsible for the debt, then you will probably also have to pay part of that solicitor's costs.

If you face a summons for money, you should not simply put it aside. If you do nothing at all, it will not be the end of the matter. The Court will make an order against you for payment.

If you do not owe the money - you must lodge papers at the Court house!

If you owe the money, but you cannot pay, then consider the following.

If you ignore the summons, the next thing likely to happen is that a Court Officer, the Bailiff, will call at your home to take some of your goods - like a car or a fridge or something similar.

You can take some very simple steps to avoid this happening.

• contact the person claiming the money and try to make an agreement for payment by instalment
• if that is not successful, send some money any way
• if a summons is issued against you, you can apply to the Court for payment by instalments. If you offer something reasonable, it is almost certain that your offer will be accepted by the creditor or the Court will make an order for instalments

• if you did not do anything when you received the summons, you can still apply to the Court for payment by instalments and you can also negotiate with the creditor

Negotiation and some payments will almost certainly get you out of trouble.

What happens if the Court has ordered you to pay and you do not pay or you cannot negotiate instalments?

• The Bailiff will come to take some of your goods or will try to sell your home. This is called a "Warrant of Execution" - it simply means that the Court order for payment is enforced

• You will be summoned to go to Court to be asked questions in Court about your income, expenditure, your property and debts. This can be a humiliating Public examination

• If you fail to attend Court for examination, you may be arrested

• Your wages, other money owed to you or bank account may be seized

• Normally the ultimate final step is that you can be bankrupted. You cannot be bankrupted for debts of less than $2,000.00