What are my Debt Recovery Options?

By 12 February 2018Debt Recovery
Options for Debt Recovery

Unless you hold security, your debt recovery options will depend on what type of entity owes you the debt, the value of the debt owed to you, and the terms of your contract or agreement with the debtor.

Who owes you the debt?

1. An individual, including an individual trading with an ABN; or
2. A company. 

An Individual

Your options are:

1. Send a letter of demand for payment;
2. Commence legal action by filing an application with the Queensland Civil and Administrative Tribunal (QCAT) if the debt is considered a minor civil dispute and the value of the debt is under $25,000; or
3. Commence legal action by filing a claim and statement of claim with the relevant Court depending on the value of the debt, as follows:

(a) Magistrates Court – Debt up to $150,000;
(b) District Court – Debt between $150,000 – $750,000; or
(c) Supreme Court – Debt more than $750,000.

In the event you obtain a Court or QCAT judgment which is not paid, you can then take steps to enforce the judgment and recover your money, including via bankruptcy of the debtor if the judgment is for more than $5,000.

A Company 

  1. If the debt is at least $2,000 or more, then the debtor company may be insolvent and you are entitled to issue a Creditor’s Statutory Demand (Demand). The Demand process should only be used if there is no genuine dispute about the existence or the amount of the debt you are owed by the debtor company.  The Demand, once served, gives the debtor company  a strict limit of 21 days to:

(a) pay the amount of the debt stated in the Demand; or
(b) come to agreed terms with you for payment of the debt; or
(c) file and serve an application in Court to have the Demand set aside.

If the 21 days allowed lapses and the debtor company has not exercised one of the above options, then it is presumed to be insolvent, and you are entitled to commence winding up proceedings based on this presumption; or

  1. Commence legal action by filing an application with QCAT if the debt is considered a minor civil dispute and the value of the debt is under $25,000; or
  1. Commence legal action by filing a claim and statement of claim with the relevant Court depending on the value of the debt, as follows:

(d) Magistrates Court – Debt up to $150,000;
(e) District Court – Debt between $150,000 – $750,000; or
(f) Supreme Court – Debt more than $750,000.

Other Considerations

Sometimes your terms of trade, contract or agreement with the debtor (individual or company) may include a charging clause or a personal guarantee.  Should that be the case, you will usually be in a better position to recover your debt, and have additional options to those outlined above.

Should you be a secured creditor, having, for example, a mortgage registered over the debtor’s land, or a properly registered security on the Personal Property and Securities Register over the debtor’s personal property, then you should obtain legal advice as to enforcing that security to recover your debt.

Contact Information

Direct Line: 07 4616 9817