Debt recovery: First steps to get your money back

4-March-2013 Commercial Disputes Debt Recovery By Jodie Rodrigues

If you or your business needs to recover a debt, there are several steps to follow.


1. Letter of demand

Firstly, you need your legal representative to send a letter of demand to the debtor. This puts the debtor on notice that the debt is due and payable and may provide you with the opportunity to negotiate an informal payment scheme. Your legal representative will also find out whether there is going to be any dispute regarding the amount owed or the existence of the debt.


2. Court process

If you do not receive a satisfactory response to the letter of demand, you have the option to commence legal proceedings in Court. Which court is used is determined by the amount of the outstanding debt. In NSW, the three relevant courts are:

      The Local Court with jurisdiction up to $100,000 for debt claims

      The District Court with jurisdiction up to $750,000 for debt claims

      The Supreme Court with no limit on its jurisdiction.

To proceed with court action, you need to file a Statement of Claim, which usually contains the following:

  1. Names and addresses of the parties and registered offices of the defendant company
  2. A statement of the reason for the legal proceedings being commenced, detailing the outstanding debt and the actions taken since the debt became due.
  3. Details of relevant documents and the date in which each document came into existence. (This will prove the existence of an agreement between the parties for payment of the amount outstanding.)
  4. Interest due, and whether it is claimed under the Court’s rules or under an agreement between the parties. As of March 2013, interest can be claimed pursuant to the Civil Procedure Act 2005 (NSW), under section 100, at the rate of 7 per cent per annum.

3. Serving the debtor

A company can be served a copy of the Statement of Claim by ordinary prepaid post to its registered office. But the Affidavit of Service must set out how it was served.

A business name can be served by ordinary post to the business address as registered at the Department of Fair Trading.

A person can be served:
     By the Local Court by post for a fee
     By a Process Server personally or by leaving it at the usual place of abode or with a person over 16 years in the Local Court
     By substituted service orders.


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Written by Jodie Rodrigues

Jodie Rodrigues

Jodie Rodrigues thoroughly enjoyed studying her degrees in Bachelor of Laws and Bachelor of Social Science (Peace & Development). She completed her GDLP in 2019 through the College of Law and commenced working as a Solicitor in 2019. Jodie practices in the Commercial Litigation team at Streeterlaw.

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