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This article was written by Sally Crosswell

Sally Crosswell has a Bachelor of Laws (Hons), a Bachelor of Communication and a Master of International and Community Development. She also completed a Graduate Diploma of Legal Practice at the College of Law. A former journalist, Sally has a keen interest in human rights law.

Debt Recovery (NSW)


Debt recovery involves collecting money from a person, people or entity (debtor) that they owe to another person, people or entity (creditor). This article explains the options for debt recovery available in New South Wales.

Starting debt recovery

Action is begun via the filing of a statement of claim at the court which has jurisdiction. Where debt recovery action is begun depends on the amount of the debt:

Debt collectors

When a friendly payment reminder, overdue payment reminder, final notice and letter of demand been ignored, engaging a debt collection agency is a likely next step.

A debt collector collects debts for remuneration or reward. The creditor can ask the debt collector to act on its behalf or sell the debt to the debt collector.

A debt collector can:

  • request payment;
  • offer to settle or make a payment plan;
  • inquire about why a payment plan has not been followed;
  • review a payment plan;
  • advise on consequences for non-payment;
  • repossess goods (in some circumstances)

A debt collector can contact a debtor between 7.30am and 9pm weekdays and between 9am and 9pm weekends, no more than 3 times a week or 10 times a month. Face-to-face contact is permitted if other methods to contact the debtor have failed.

A debt collector cannot:

  • trespass on private property;
  • use overbearing behaviour or abusive language;
  • harass or contact a debtor outside permitted hours or more times than permitted;
  • mislead or deceive a debtor;
  • take advantage of a debtor because of characteristics such as illness, disability, age or illiteracy;
  • discuss a debt with a third party without the debtor’s permission.

Debt recovery through NCAT

An application to NCAT must be made within 3 years of when the debt dispute arose. A claim is usually listed for conciliation and hearing. NCAT can make an order that:

  • money be paid;
  • money owned does not have to be paid;
  • goods and services be provided;
  • faulty goods be repaired or replaced;
  • the goods be returned and a refund be issued.

An NCAT order can be enforced in the Local Court, via such methods as a warrant to seize and sell property, redirect a debt, redirect earnings, or pay a debt by instalments.

Local Court

Debts of up to $10,000 are dealt with by the Small Claims Division of the Local Court, and debts of between $10,000 and $100,000 by the General Division. A creditor has 6 years to pursue a debt in court.

Small Claims Division

A statement of claim needs to be filed, including:

  • the name and address of the person who owes money;
  • the dates and events of the claim;
  • details of what is being claimed.

The claim is then served on the debtor, who has 28 days to either:

  • pay the debt in full;
  • apply to the court to pay the debt by instalments;
  • file a defence;
  • request further information;
  • attempt to negotiate a resolution with the claimant;
  • take no action.

If the other party opts to take no action, the claimant can apply to the court for a “default judgement” in the claimant’s favour.

If the other party disagrees that they owe some or all of the debt being claimed, that party will file a defence form listing the reasons and the court will send a copy to the claimant.

At a pre-trial review, the parties try to resolve the dispute. Documents and witnesses are presented, and a magistrate or registrar will encourage the settlement of the case.

If no settlement is reached, the case will be listed for a hearing. At the hearing, the magistrate or an assessor will consider all evidence and submissions from both parties then make a decision.

General Division

After a statement of claim is filed in this division, the court will allocate a “directions call over”, where it will decide to:

  • adjourn the matter;
  • refer the parties to mediation or arbitration;
  • dismiss the claim or strike out the defence;
  • allocate a hearing date;
  • direct the parties to provide witness information;
  • direct the parties to file a statement of agreed facts and issues.

The court may then call a second directions call over, a review of whether the matter is ready for a hearing, or allocate a hearing date.

District Court and Supreme Court

Each court has its own specific procedures and rules of evidence. The higher the court, the more formal the procedures and the rules of evidence become, and the higher the costs.

For advice or representation in any legal matter, please contact Armstrong Legal.

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