In New Brunswick, hiring a lawyer for commercial debt collection typically involves either a contingency fee (taking 20% to 35% of the total amount recovered) or an hourly rate ranging from $250 to $500 CAD. Many businesses prefer the contingency model because they only pay legal fees if the debt is actually collected.
When clients or vendors refuse to pay their invoices, it creates a severe strain on your company’s cash flow. While internal collection calls and emails are a good starting point, there comes a time when you need the heavy hand of the legal system. Hiring a debt collection lawyer in New Brunswick shows the debtor that you are serious and prepared to take formal action through the Court of King’s Bench to recover your hard-earned money.
Understanding how collection lawyers charge for their services is vital for your business. 💰 Whether you are trying to recover a $25,000 equipment lease in Moncton or a $150,000 unpaid construction invoice in Fredericton, the cost structure you choose will determine your final return on investment. The key is to balance the size of the debt against the likelihood of actually seizing the debtor’s assets.
Step-by-Step Process in New Brunswick
The legal process of collecting a commercial debt is highly systematic. 📍 It moves from informal warnings to strict court enforcement. A local law firm will guide you through these specific stages to ensure every action complies with New Brunswick’s collection and civil procedure rules.
Step 1: Reviewing the Debt and the Debtor
Before taking the case, a lawyer will review your contract, the unpaid invoices, and any communications with the debtor. More importantly, they will conduct a “skip trace” or asset search to determine if the debtor actually has the money to pay. Suing a bankrupt company is a waste of time and legal fees.
Step 2: Sending a Formal Demand Letter
The first official legal step is drafting a demand letter on the law firm’s letterhead. 📧 This letter gives the debtor a strict deadline (usually 10 to 14 days) to pay the balance in full or negotiate a payment plan. For many debtors, the sheer reality of receiving a letter from a lawyer is enough to prompt immediate payment.
Step 3: Filing the Statement of Claim
If the demand letter fails, your lawyer will file a Statement of Claim in the Court of King’s Bench (or Small Claims Court if the debt is under $20,000 CAD). The debtor will be served with the lawsuit and given 20 days to respond. If they dispute the debt, the case moves into formal commercial litigation.
Step 4: Obtaining a Default Judgment
Often, commercial debtors simply ignore the lawsuit because they know they owe the money. 📄 If they fail to file a Statement of Defence within the 20-day window, your lawyer can apply for a Default Judgment. This is an official court order declaring that the debtor legally owes you the money, allowing you to begin enforcement.
Step 5: Enforcing the Judgment
A judgment is just a piece of paper until it is enforced. Your lawyer will use the court order to take aggressive action. This can include garnishing the debtor’s corporate bank accounts, intercepting money owed to them by the CRA, or directing a sheriff to seize and sell their business equipment or real estate.
How Much Does it Cost in New Brunswick?
Debt collection lawyers typically offer two different billing models. You and your lawyer will decide which model makes the most financial sense based on the size and age of the debt.
- Contingency Fees: The lawyer charges no upfront hourly fees. Instead, they keep a percentage of whatever money they successfully recover. In New Brunswick, this usually ranges from 20% to 35%. If they collect nothing, you pay no legal fees (though you still cover court costs).
- Hourly Rates: You pay the lawyer for every hour they spend working on the file, regardless of the outcome. Rates generally range from $250 to $500 CAD per hour. This is better for very large, highly contested debts.
- Court and Enforcement Fees: You must always pay out-of-pocket expenses, such as the $110 CAD court filing fee, process server fees, and sheriff enforcement fees, which typically total around $500 to $1,000 CAD.
| Fee Structure | Best Used For | Financial Risk to You |
|---|---|---|
| Contingency (Percentage) | Straightforward, uncontested invoices | Low (Only pay if you win) |
| Hourly Billing | Complex contractual disputes | High (Pay regardless of outcome) |
| Flat Fee Demand Letter | Testing the waters early on | Very Low (Usually $300 – $500) |
How Long Does the Process Take?
The timeline for debt collection depends entirely on the debtor’s response. ⌛ If a simple demand letter is successful, you could have a cheque in your hands within 14 to 30 days.
However, if you need to go through the court system to get a Default Judgment and enforce it, the process typically takes 3 to 6 months. If the debtor actively defends the lawsuit and forces a full commercial trial, it could take 1 to 2 years to resolve the matter.
Frequently Asked Questions (FAQ)
Can I add my legal fees to the debt owed?
Generally, you can only force the debtor to pay your collection costs and legal fees if your original business contract explicitly contains a clause stating they are responsible for these costs upon default.
What is the Small Claims limit in New Brunswick?
As of April 2026, the limit for Small Claims Court in New Brunswick is $20,000 CAD. If the debt is higher than this, you must file your lawsuit in the Court of King’s Bench.
How long do I have to collect a debt?
Under the New Brunswick Limitation of Actions Act, you have exactly two years from the date the invoice became overdue (or the date of their last partial payment) to file a lawsuit.
What if the debtor company goes bankrupt?
If the debtor files for formal bankruptcy or insolvency, all collection lawsuits are immediately halted by a “stay of proceedings.” You will become an unsecured creditor and will likely only recover a small fraction of the debt.
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