Debt Recovery in Australia: A Step-by-Step Guide to Get Your Money Back

 

Many individuals and businesses often find themselves in challenging situations where they have provided goods, services, or loaned money, only to face the frustration of unpaid debts.

If you’re one of those seeking effective strategies to reclaim what is rightfully owed to you, this guide on debt recovery in Australia is here to help.

We will walk you through each step of the process, offering a clear and actionable roadmap to master debt recovery in Australia and successfully get your money back.

 

Step 1: Letter of Demand

 

The first step for debt recovery in Australia is to write a letter of demand to put the debtor on notice that you are prepared to go to court.

This letter should set out the basis of your claim and the amount of the debt.

The debtor may then offer to pay your debt in instalments or negotiate the debt amount.

In some cases, this letter clicks the debtor into gear to pay their debts.

If you do not hear from the debtor within 21 days of sending this letter, you escalate the matter.

 

Step 2: Start a Claim

 

In South Australia, if the debt owed to you is $12,000 or less, you may commence a minor civil claim in the Magistrates’ Court.

If the debt is between $12,000 and $100,000, you may commence a general civil claim in the Magistrates’ Court.

Your claim must include the amount that you want to claim, the name and address of the defendant, and the reason you believe you are owed money.

It is important to keep documents that prove the debt, such as your invoices, agreements/contracts, emails and bank records.

After your claim is filed with the Court, it must be served on the defendant.

The defendant will then either admit the money is owed to you, file a defence and/or counter-claim, or not respond.

If a defence and/or counterclaim is filed, you will receive a copy and a notice of a directions hearing.

The defendant has only 21 days in which to file a defence.

If the defendant has not responded within 21 days of receiving your claim, you may make an application for default judgment.

 

Step 3: Directions Hearing

 

At a directions hearing, the Court will try to resolve the dispute.

The purpose of this hearing is to establish a framework for the subsequent stages of the legal proceedings, ensuring that the case progresses in an organised and efficient manner.

The court’s main objective at this stage is to explore the possibility of reaching an agreement or settlement between the parties without the need for a full trial.

If your matter cannot be resolved, the Court may decide a trial is necessary.

 

Step 4: Trial

 

A trial will only occur if the debt is disputed by the defendant.

You and the defendant will have an opportunity to present your arguments, evidence and any witnesses.

If you are successful, the Court will ask the defendant to make arrangements to pay you.

 

Step 5: Default Judgment

 

If the defendant has failed to file a defence, you may make a request to the Court for Judgment in Default.

Essentially, default judgment means the defendant is considered to have accepted your claim.

 

Step 6: Enforcement

 

There are several ways you can enforce judgment:

 

Investigation Hearing

This hearing is to determine whether the debtor can pay the debt. Before the hearing, the debtor is required to detail their income and expenses. The debtor is required to attend this hearing.

 

Warrant of Sale

This is issued by the Court and gives the Sherriff authority to sell property owned by the debtor to pay the debt.

 

Charging Order

You can place a charging order over the debtor’s property. This means that the debt will be repaid whenever the property is sold or transferred.

 

Garnishee Order

A Garnishee Order allows any money owed to the debtor to be paid directly to you (for example, a debt owed by a third party).

 

Bankruptcy

You can make an individual debtor bankrupt if the debt is more than $5,000.

If a person is made bankrupt, all of their assets are assigned to a trustee who sells the assets and shares the proceeds with their creditors.

 

Liquidation

You may take steps to have a debtor that is a company placed into liquidation if the amount of the debt is $2,000 or more.

 

Contact Us

 

By following this step-by-step guide, you’ll have a comprehensive understanding of debt recovery and the tools required to effectively pursue outstanding debts, thereby increasing the likelihood of getting your money back.

Remember, each situation may differ, and it’s essential to seek professional advice if needed, but armed with the knowledge in this guide, you’ll be better prepared to take on the challenges of debt recovery with confidence.

For more information about our step-by-step guide to mastering debt recovery in Australia, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.

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You can also read more about our dispute resolution services here.

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