Debt Recovery (Qld)
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 Queensland.
Where to start debt recovery
Where debt recovery action is started depends on the amount of the debt:
- Up to $25,000: Queensland Civil and Administrative Tribunal (QCAT);
- $25,000 to $150,000: Magistrates Court;
- $150,000 to $750,000: District Court;
- Over $750,000: Supreme Court.
Before taking any action via QCAT or a court, mediation can be attempted through the Dispute Resolution Branch of the Department of Justice and Attorney-General. A trained mediator helps parties assess the dispute and try to agree on a solution.
Before hearing matter, QCAT can refer parties to “abbreviated mediation”, called this because it usually take only an hour or so. If no agreement is reached, the tribunal can hear the matter.
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 role includes tasks such as requesting payment and repossessing goods or property other than real estate. There are two types of debt collectors in Queensland: field agents and collection agents.
A field agent repossess goods, collect debts in person and serve documents. They require a licence. To be eligible for a licence, a person must be an adult and meet certain criteria. These include that the person must not:
- be an insolvent or under administration;
- be disqualified from holding a licence or registration;
- have been convicted of a serious offence (punishable by 3 or more years in prison) in the past 5 years.
A collection agent only collects debts and contacts debtors via phone or in writing. They do not require a licence. They usually work in call centres and do not have face-to-face contact with a debtor. They must not visit a debtor’s property, repossess goods or serve documents.
Agent conduct is governed by the Debt Collectors (Field Agents and Collection Agents) Act 2014. Some debt collection practices are prohibited under the Act. These include:
- acting for both parties in a debt collection matter;
- using a field agent licence to exercise a power a field agent may not lawfully exercise;
- entering any premises without lawful authority;
- using a false or misleading representation to induce a debtor to pay.
QCAT can hear a debt dispute involving a person, business or company about a sum of money up to $25,000. Examples include an unpaid account, rent arrears or unpaid loans. A creditor begins an action by filing an application with the tribunal. The claim is served on the debtor who has 28 days to pay the debt or dispute the claim. If the claim is disputed, QCAT will list the matter for mediation. If mediation fails, parties organise evidence and witnesses for a hearing, after which QCAT will make a binding decision. A QCAT order for the payment of money can be enforced in the Magistrates Court.
To enforce a QCAT order, the creditor needs to provide to the Magistrates Court a copy of the order and an affidavit confirming the amount which has not been paid and any other non-compliance with the order. The court can issue several types of enforcement warrants.
Warrant for seizure and sale of property
This order authorises an enforcement officer to attend a debtor’s home or business and demand payment of a debt. The sheriff cannot seize property considered essential to the comfort of the debtor, such as a fridge or television. Seized items are sold at public auction to satisfy the debt.
Warrant for redirection of a debt
This order allows a person to recover the debt from a third party. Money can be sought from any party that owes money to the debtor. To make this order, the court needs evidence of the debtor’s employment, and their living expenses and dependants, to establish that the debtor can satisfy the order without unreasonable hardship.
Warrant for redirection of earnings
This order allows a creditor to collect money directly from a debtor’s income. To make this order, the court needs the same evidence as for a warrant for redirection of a debt.
Warrant for payment by instalments
This order states a debt is to be repaid in weekly, fortnightly or monthly instalments. A debtor or creditor can apply for an instalment order. No further action can be taken to enforce payment while an instalment order is in place.
If the debt is more than $25,000, debt recovery action can be started in the Magistrates Court, District Court or Supreme Court, depending on the amount of the debt. A creditor must file an application and a statement of claim with the court, and these must then be served on the debtor. The debtor can choose to pay the debt or dispute the claim by filing defence documents with the court. The creditor can then respond to the defence or request a court hearing. In many cases, a court will refer a matter for mediation or alternative dispute resolution before listing the matter for a hearing.
For advice or representation in any legal matter, please contact Armstrong Legal.