Advice on Using a Debt Collector for $5k Owing by Ex-Tenant

Cacao on 20/07/2023 - 08:45
Last edited 20/07/2023 - 10:01 by 1 other user

Hello, we have an investment in Brisbane managed by a real estate agent.

Last year we had to kick a tenant out who stopped paying rent. Long story short police had to get involved and he left a big mess behind. After he left we found out that he had someone else with a kid living with him. He had a partner on the lease for a while but the last year of the lease was supposed to be just him. He had a dog.

Unfortunately he left us a hefty bill of nearly $5000 to clean up his mess and the rent he owes us and this is on top of the bond. This was decided in the magistrate’s court.

We have been looking into how we can recover the money. Have spoken to several local debt collectors and it looks like we’d almost lose half the money going down this route. Another option is civil litigation. I have spoken to a lawyer but to get proper advice we’ll need to pay consultation fees. Apparently we can pass on all/some of the legal fees eventually.

I am just looking for some advice from people who have been through something similar.

Thanks for reading

PS:
The tenant lived at the property for 3 years and against advice from our real estate we never raised the rent by a cent. We now know that the tenant had stopped working and was on government pension (military).

Financial Investment

Comments

  • WreckTangle on 20/07/2023 - 08:48
    +60

    Easy, claim it on your tax deductible landlord insurance that all responsible landlords have.

  • Cacao on 20/07/2023 - 08:51
    +4

    We had landlord insurance at the time but this particular one is not claimable.
    We have since changed providers.

      • idonotknowwhy on 23/07/2023 - 08:55

        Make a guaranteed 5% on the cash market

        LOL

    • AustriaBargain on 20/07/2023 - 12:30
      +8

      Why not just eat this one? It sounds like you have a lot of spare time but at a certain point recovering this $5,000 is going to "pay" you less than minimum wage per hour.

    • burningrage on 20/07/2023 - 15:23
      +11

      Sorry to hear.

      One landlord suggested to me once in the situation like this, you could apply for the tenant to be bankrupted and this probably could make the tenant take it seriously.

      Didn't have experience in this area but this just reminded me of that conversation. Hope this helps

        • MorriJ on 22/07/2023 - 12:40

          $10k combined minimum debt for a bankruptcy order?

    • SlickMick on 21/07/2023 - 08:54
      +3

      I feel for you. Cost us $20K+ and 3 months untenanted to recover our place.
      We'd changed insurers - huge mistake - old insurer didn't want to talk to us, and new insurer said "the incident" occurred before we were insured with them.
      So do we fight with insurance via ombudsman, or tenancy tribunal, or direct with ex-tenants, or all of the above?

      I thought a debt collector might be the best way to go.
      I'd be happy to sell the debt for even 10% just to move on but know that the ex-tenants don't get away with it scot free. But I assume I'd have to go through the tenancy tribunal first to get the debt approved??

      I was told we'd never get anything from the tenants. Apparently they know it. Now I understand.
      We'll probably write it off rather than get frustrated all over again for money we'll probably never see.

      Let us know how you go.

      • Cacao on 23/07/2023 - 22:03

        @SlickMick
        Sorry to hear that you are going through something similar.
        Where is your property located?
        Do you have a property manager?
        I have been speaking to a company their costs are reasonable with no upfront costs. But they will only deal with my property manager.
        If you send me a dm, I will let you know how we go with this.
        I have to say we have been extremely lucky that our agent has been super helpful/responsive about the whole thing. In terms of getting cleaning/repair works sorted, getting the ruling at the court (QCAT in our case).
        Yes you have to go through the court to get the amount approved by the magistrate.

        Some of it may be tax deductible but only on the expenses. Can’t claim tax on lost rent!!
        It’s all very frustrating. We scrimped and saved for a deposit then invested time and effort to find a property. We always treated the property as if we were living there. We responded to every request from the tenant promptly never raised rent and in the end to be treated like that is very harsh. We still have to pay the bank and everyone else like the Council, water etc etc..
        We are seriously gobsmacked how easy it is for a tenant to say nah not feel like paying rent anymore and even get away with it…..

        Good luck. Let us know how you go too..

        • JimB on 28/07/2023 - 12:04

          You effectively claim tax on lost rent as you can still claim the interest during the period of no rent.

          As a landlord myself, unfortunately, you sometimes have to wear it. Can't get blood from a stone.

          Consider it a cost of doing business.

          Good thing is that your investment in Brisbane has most likely gone up hundreds of thousands during those three years.

          Say $200k capital increase less $5k expense. Sounds like a good deal to me.

    • YesPleaseThankYou on 21/07/2023 - 13:18
      +1

      Why was not claimable?

      Did you claim and it was denied? Or, did you determine that it was not claimable?

      Who was your previous insurance with?

    • serpserpserp on 21/07/2023 - 18:04
      +3

      Why is it not claimable? Seems like bread and butter landlord insurance

    • JungliChilli on 22/07/2023 - 07:24

      Who were you with and who did you change to?

    • berry580 on 22/07/2023 - 09:27
      +2

      What was the name of your insurer at the time?

      • YesPleaseThankYou on 22/07/2023 - 09:50
        +12

        It seems that the OP doesn't want to explain the landlord insurance circumstances. I do wonder why.

        They were last seen 1 hour 30 min ago.

      • Cacao on 23/07/2023 - 22:09

        Allianz

    • So Was Red on 22/07/2023 - 15:55
      +2

      OP may not have followed some T&C or requirement of insurance policy
      Maybe something like:
      * Not issuing notice to remedy breach immediately
      * Policy did not cover tenants with pets
      * Regular inspections too infrequent etc
      Who knows, sucky situation
      Seems like if something can be spoiled someone will spoil it :(
      Good luck OP, keep us posted

  • elgrande on 20/07/2023 - 08:53
    +31

    Are you prepared to throw good money chasing bad money?

  • GoldenDragon888 on 20/07/2023 - 08:55
    +24

    Are the debt collectors going give you that 50% right up? As in are they buying the debt? If so that pretty good. take the 50% and move on.

    Does he likely have assets to pay for this debt? If not then no legal decision is going to get that money (quickly). A payment plan would be tokenistic at best.

    Sell your property, go index funds.

    Edit: Thankfully this $5000 will be a tax write off. "They write it off Jerry!"

    • Cacao on 20/07/2023 - 09:06

      No. Debt collector we spoke to will take ~30% of whatever money is recovered. Plus upfront fees. Plus other fees like set up a payment plan etc if he agrees to pay

      • Seraphin7 on 20/07/2023 - 09:52
        +3

        You'll need to make a call, but the reality of it is that you should be happy with whatever you can get.

        It sounds like old mate has no money and doesn't care in any event. With a lot of angst you could probably get a ruling for $20 a week or some other amount, but it's actually not going to recompense you.

        • JimmyF on 20/07/2023 - 10:31
          +1

          and even with a ruling, doesn't mean they will pay the $20/wk. So back to court again.

        • Typical16-bitEnjoyer on 20/07/2023 - 11:05
          +1

          OP 100% won't get a ruling, but I'm sure their "debt collector" told them why and they've purposely neglected to include that in their original post.

          • LVlahov on 22/07/2023 - 17:22

            @Typical16-bitEnjoyer: Why can't he get a ruling? PTSD isn't a valid reason to escape a civic debt, it may allow for more generous payment terms, and some escape from criminal liability (if such a thing applied), but not for the wiping of responsibility for a debt altogether.

            • Typical16-bitEnjoyer on 26/07/2023 - 12:33
              -1

              @LVlahov: Look at what OP said the former tenant's income is derived from, then look at the Court rules regarding that. Not rocket surgery.

              • LVlahov on 26/07/2023 - 23:08

                @Typical16-bitEnjoyer: There is a difference between a court saying a person can break another person's property, and it is just bad luck for that person, and a court saying, because of the limited income of a person, their welfare payments will only be docked $5 per week, to pay back the debt over a very long time.

                The court is not going to say the former.

                Bankruptcy court may (I am not saying definitively here) get a person out of such a debt, but that is a step following the above, and does not precede it.

      • Mokr on 20/07/2023 - 10:07
        +1

        How much does it cost to become a debt collectof

  • Cacao on 20/07/2023 - 09:02
    +9

    Honestly it’s been very frustrating but it’s about principles. Our society relies on people doing the right thing and acting in good faith

    • Lord Fart Bucket on 20/07/2023 - 09:38
      +17

      Our society relies on people doing the right thing and acting in good faith

      That's utopia. Reality is different.

      • dogboy on 20/07/2023 - 10:38
        +25

        I think for 95% of society this is true and people abide by the rules. It is the other 5% of scumball lowlives that ruin everything for the rest of us.

      • cookie2 on 20/07/2023 - 19:36
        +17

        That's not utopia. It's called adhering to societal norms and standards and having good morals.

    • p1 ama on 20/07/2023 - 11:33
      +6

      Our society relies on people doing the right thing and acting in good faith

      No it doesn't, the very fact that we require extensive enforcement means that this is absurdly untrue.

      • Protractor on 20/07/2023 - 13:41
        -7

        Delusional in fact. We are a wilder west than we were decades ago, and personal wealth driven greed and social media has eaten up our last vestiges of kindness. Scrapping negative gearing would be cause to celebrate. Until the govt grows balls and takes on these scam tax avoidance perks, the cost of living crisis is a permanent thing. It's more likely to get worse.

        • LVlahov on 22/07/2023 - 17:28
          +2

          You'll have high prices for the duration of the time the government runs a high immigration program. Investors chase gains that are produced by boosted demand. Demand is boosted by importing people.

          Without the demand boost from migration, the population would head to a stable level, if not declining. Meaning shrinking demand, and no gains to chase, hence no profit in negative gearing. Hence no investor demand. The market is out of balance thanks to migration, but interestingly that is the lever the left are unwilling to touch. Isn't that interesting for a group of people supposedly 'for the poor'. And perhaps they are, but not the Australian poor.

          • Protractor on 22/07/2023 - 18:26

            @LVlahov: The problem is Australia is not just over immigrating, it has lost it's way via the same process.
            So the wall we hit is unavoidable. It's just a matter of time as the population level speeds up the inevitable.
            Barracking for left and right won't make a scrap of difference.
            Politics proves stupidity and cowardice doesn't need a left or right mindset to thrive.

            • LVlahov on 22/07/2023 - 20:20

              @Protractor: There is an answer, but it is the one most forbidden for people to embrace.
              And until enough do, we walk the path not embracing it brings.
              Replacement, and the economic winner/loser consequences that come with it.. no matter what other policies people drape around it. Only one of the hard left, soft left, soft right and hard right oppose population replacement, and do not treat populations as replaceable and undifferentiated units of production. Three with a materialist view of humanity, and one that sees humanity - and its component groups - as having other more important sides: cultural, spiritual and biological, that should never be trodden under a materialist view, or given anything less than utmost importance.

              And if it isn't clear, the group I am referring to is not one guided by Marx, who very much viewed took a materialist view of man and ran with it.

      • Protractor on 22/07/2023 - 18:28
        +1

        Rubbish. We make up our bogey men and hide under the bed . Every time we poke out our shivering noses the Yanks go BOO!
        We need protecting from ourselves

      • ssfps on 23/07/2023 - 00:37
        +1

        military protection

        How many ex-servicemen alive today saw combat defending us, vs going on the offensive, often for economic interests?

    • Ghost47 on 20/07/2023 - 11:37
      +11

      doing the right thing

      Some examples of things I think that can be considered as “doing the right thing” are:

      • Not littering because there’s no bin nearby
      • Driving at the limit even when there are no speed cameras around (also not using your mobile when driving — GPS might be acceptable)
      • Letting someone know they’re driving without their lights on at night
      • Letting someone merge in front of you especially when it’s peak hour traffic and their lane is about to end (unless they deliberately skipped the long queue behind you)
      • Calling out bad behaviour at the workplace (or anywhere in general really)

      Conversely to these examples I would consider being greedy and attending an auction to buy your fifth investment property (and as a result elbowing out a couple of FHBs who just want a place to live in) as not doing the right thing. Nor do I consider people who hoarded toilet paper during the pandemic as doing the right thing.

      As you can see, a lot of people in society get it wrong.

      • Gdsamp on 20/07/2023 - 14:21
        +2

        nooooo they're providing housing bro

      • xylarr on 21/07/2023 - 16:42
        +4

        You forgot putting the shopping trolly back after you've loaded your car.

        • Ghost47 on 21/07/2023 - 16:53
          +2

          That's a good one. Reading my list again with your point added I've realised everything listed are things you would expect any decent person to do so it's kind of sad how people don't display these sort of behaviours (from what I've experienced anyway). It's not like these things take a lot of effort either.

      • toomuchdogfur on 23/07/2023 - 11:40

        Letting someone know they’re driving without their lights on at night

        The onus of "the right thing" here is more on the person driving around without lights on isn't it? Where the right thing to do is for them to equate night = turn headlights on for everyone's safety instead of "if I can still see, I don't need headlights".

        (Though I say this as someone who does flash people who don't have headlights on… With a success rate of 1/100 🥲)

        • Ghost47 on 23/07/2023 - 15:39
          +1

          I’m looking at it from the perspective that people are still human and stuff up from time to time so I consider helping them out as doing the right thing.

          I get what you mean though.

    • Sinnerator on 21/07/2023 - 09:59

      Do you buy from evil greedy business owners?
      Do you freely give your most personal information to evil greedy corporations?
      Do you vote for evil greedy politicians?
      etc etc
      Our society relies on idiots being idiots - there is no good faith

    • outlander on 21/07/2023 - 14:26
      +2

      "It's about the principle"

      Said by people who got screwed over for the first time in their life and can't deal with it. Meanwhile people are getting screwed over ever day, and yet thats totally acceptable.

      It's not about the principle. Its about the Pride

      • Cacao on 23/07/2023 - 22:43

        You have made some interesting assumptions.
        So it’s justifiable in your view? Interesting

        I do smell a sense of entitlement in your comment there

    • Antikythera on 22/07/2023 - 00:51
      +2

      Our society relies on people doing the right thing and acting in good faith

      ahahahahaa ah!

      sorry. our society relies on the rule of law. and only the rich can afford to use the legal system.

    • Serapis on 23/07/2023 - 01:08
      -1

      LOL, you sir are a donkey.

    • hawkshead on 23/07/2023 - 19:21
      -1

      wouldnt the right thing be to accept housing as a basic right and not charge rent? or is it that you want to get paid.

    • Cleremy on 23/07/2023 - 19:23

      Our society relies on people doing the right thing and acting in good faith

      Say goodbye to that as our demographics shift.

      • Cacao on 23/07/2023 - 22:45

        In my view it’s ‘trumpism’ not demography!

  • Euphemistic on 20/07/2023 - 09:03
    +6

    How much rent is owed? You likely aren’t going to see much of that from someone on a pension.

    You aren’t going to see a cent of the damages. Setting Debt collectors on poor people is virtually a waste of time.

    • Mokr on 20/07/2023 - 12:59
      +1

      It's 5k, I'm sure they could make that back even if on pension.

      If you even get 1k I wouldn't say it's a waste.

      • Euphemistic on 20/07/2023 - 13:22

        Wasn’t suggesting it’s not worth trying, just that you shouldn’t expect too much return.

      • AustriaBargain on 20/07/2023 - 13:37

        Then sell to a debt collector for 2.5k, better than 1k. Unless the debt collector doesn't believe they will get any money and just buys half of it on the random chance they will just pay if sent a letter or called up a few times, kind of like a compensation lawyer taking a losing case thinking they might just pay something to make it go away.

    • Ade99 on 21/07/2023 - 09:34

      getting them declared bankrupt will not bother a pensioner very much….

  • netjock on 20/07/2023 - 09:13
    +2

    Have spoken to several local debt collectors and it looks like we’d almost loose half the money going down this route

    Outsource it and save yourself the trouble.

    This is the problem with property. It is a single asset with single risk (tenant).

    I'm looking at debt recycling (paying off your home loan to like within $1 then taking it out and putting it into the share market index ETF). Still leverage but someone else is managing those businesses and you'd home they are more professional.

    • Ghost47 on 20/07/2023 - 09:24
      +7

      Outsource it and save yourself the trouble.

      OP outsourced the management of the property and that didn’t end up well.

      Willing to bet there are heaps of people out there subletting rooms without the landlord’s permission.

      • netjock on 20/07/2023 - 09:30
        +2

        Yes, outsourcing but you are talking about two different skillsets.

        Real Estate agent takes a 10% commission on $2k a month. $2400 a year. Property managers come and go.

        Debt collector takes 50% commission, $2.5k if you can chase it down in a day. There is only 2 big listed debt collection agencies in Australia and one of them (Credit Corp) does really well.

        • resisting the urge on 20/07/2023 - 11:45
          +1

          This is always the way. Outsource something, and the third party create work for the next 'outsourcer'

          This is why outsourcing providers call themselves 'partners', they always have the next leech lined up to suck on their 'qualified' leads!

          Any why we call them third parties, as they always have a party at everyone else's expense!

          • netjock on 20/07/2023 - 13:36

            @resisting the urge: I can agree with that.

            Did you see the documentary the technical support scams out of India. They call old people and say they are from Microsoft and they see there is a virus on their computer and they need to remote in and then show them $399 to remove the virus (when there is none).

            Some of those scam call centres are in the same building as real Microsoft and they are probably picking up the tab.

            Our offshore team parties every month and the manager can afford to send their kid to Australia to do Uni when the equivalent manager won't be able to send their kids to say the UK to do the same.

            • resisting the urge on 20/07/2023 - 13:47

              @netjock: The biggest scams come from jurisdictions where obligations/onus is lowest.

              In India amongst others, the onus is low for bureaucratic/practical reasons (made worse by corruption) and in the US where 26 words in Section 230 enables all kinds of trolls and from solo whiners to multinaitonals corps to leverage platforms for their own purposes, as those platforms are seldom equipped to deal with it, and usually place the onus on others to 'help' them reduce it, which as we see more and more, is simply not working.

  • JIMB0 on 20/07/2023 - 09:28
    +14

    You can't get blood out of a stone. But you can sure waste time and money trying.

  • rambutann on 20/07/2023 - 09:32
    +3

    Yeah it's not a lot of money in the grand scheme of life - and if it is, you probably shouldn't have an investment property.
    As frustrating as it is i'd be moving on.

    It will indeed be like getting blood out of a stone.

    EDIT: I understand the principles thing, but somethings its not worth the fight. This is likely one of those times.

    • Protractor on 20/07/2023 - 13:31
      -2

      Principles are long gone. We swapped them for profit. Even if at other humans suffering.

  • MS Paint on 20/07/2023 - 09:33
    +3

    Pick your battles.

    • Euphemistic on 20/07/2023 - 13:24
      +4

      Or your nose.

      • MS Paint on 20/07/2023 - 14:00
        +7

        On this occasion it would be cheaper, easier and definitely tastier.

  • Typical16-bitEnjoyer on 20/07/2023 - 09:45
    -1

    Please, I encourage you to throw good money after bad, fail miserably and sell your investment property as it's "too hard" and "not fair" so an owner occupier can pick it up.

    Stick to shares or something.

  • pharkurnell on 20/07/2023 - 10:17
    +1

    If hes on a pension, what makes you think he has 5000 to get out of him?

    • Mokr on 20/07/2023 - 12:59

      Beer and cigs found at the home

  • JimmyF on 20/07/2023 - 10:29
    +1

    Unfortunately he left us a hefty bill of nearly $5000 to clean up his mess and the rent he owes us and this is on top of the bond

    You might be pushing to get the $5k for the cleanup back, how much rent was owed?

    Anyhow, this is why you have landlord insurance to cover all these things.

    The $5k is a tax write off, so do that. Debt collections will generally 'buy' the debt, aka 20-30c on the dollar owed depending on the type of debt.

  • tsunamisurfer on 20/07/2023 - 10:58
    -1

    Chase him.

    Do your best to make his life as difficult as possible, destroy him.

    Put him on the rental black list.
    Contact him constantly to chase for money.
    Use debt collector.
    If you know where he currently lives and is renting, tell his current PM about this situation.

    Renters should never be able to get away with this crap. The laws need to change to protect investors.

    • Typical16-bitEnjoyer on 20/07/2023 - 11:01
      +3

      you forgot the "/s"

      • tsunamisurfer on 20/07/2023 - 11:12
        +3

        No. I checked.

        • Typical16-bitEnjoyer on 20/07/2023 - 11:14

          Oh you were being serious? Shame 2 of your ideas are illegal, 1 is impossible and 1 won't achieve any result. I'll let you work out which is which.

      • Protractor on 20/07/2023 - 13:33
        +1

        also forgot to say, make sure he has no armoury stashed away

    • ssfps on 23/07/2023 - 00:39
      +3

      The laws need to change to protect investors.

      LOL

    • MS Paint on 20/07/2023 - 11:11
      +1

      That peace keeping mission in Fiji definitely took it's toll on some.

      • monky on 20/07/2023 - 11:19

        hehe

      • FlyingMiffy on 22/07/2023 - 10:15
        +2

        Or shooting unarmed Afghan civilians and unarmed Afghan PoWs.

        • SpainKing on 22/07/2023 - 12:23
          -1

          I thought that was just Scojo and his mates

    • Typical16-bitEnjoyer on 20/07/2023 - 11:12
      +3

      Unless the former tenant was Ben Roberts-Smith, that's a key exception.

      • Gunnar on 20/07/2023 - 18:40
        +5

        He’d rob the debt collector then shoot the money

    • wombatzzz on 20/07/2023 - 13:04
      +7

      Why are they a hero? Just a glorified public servant getting a generous pension.

    • Euphemistic on 20/07/2023 - 13:25
      +7

      Not all military vets are heroes.

    • Protractor on 20/07/2023 - 13:35
      +2

      The Brereton enquiry begs to differ. Hero is a 'very' flexible term, BTW.

    • monky on 20/07/2023 - 14:18
      -2

      Woosh to the downvoters

    • FlyingMiffy on 22/07/2023 - 10:16

      Your definition of a hero needs work.

  • Calmago on 20/07/2023 - 11:18

    Best to claim it on tax for a lower amount like that. You'll receive x% of that amount as part of your tax return, which will be similar to what a debt collector will recover anyway.

    • freefall101 on 20/07/2023 - 11:46
      +1

      If they sell the debt for, say, $2500 the other $2500 is still a tax write off.

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