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Debt Recovery (Vic)

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 Victoria.

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 role includes tasks such as requesting payment and repossessing goods or property other than real estate. A licence is not required. However, a person is prohibited from engaging in debt collection if they:

  • are aged under 18;
  • are a “represented person” under the Guardianship and Administration Act 2019;
  • have in the past 5 years:
    • had a private security licence or registration cancelled or suspended;
    • been found guilty of an offence involving fraud, dishonesty, drug trafficking or violence punishable by imprisonment of 3 months or more;
    • have been involved in the use of physical force, undue harassment or coercion in contravention of the Australian Securities and Investments Commission Act 2001 or equivalent provisions in other Acts.

Debt collector conduct is governed by the Australian Consumer Law and Fair Trading Act 2012.

Some debt collection practices are prohibited in Victoria.

Private residences

A debt collector must not enter or threaten to enter a private residence without lawful authority; use threat, deception or misrepresentation to gain consent to enter a property; or refuse to leave a private residence when asked.

Debt information

A debt collector must not expose or threaten to expose a person or their family to ridicule over a debt; disclose or threaten to disclose a debt without the debtor’s consent; or make a false or misleading representation about the nature or extent of a debt or the consequences for non-payment.


A debt collector must contact a debtor using their preferred contact method. They must not contact a debtor when the debtor has advised in writing that no further communication should be made, unless this is permitted under law, such as for court action. They must also not contact a debtor in a way that is unreasonable in frequency, nature or content.

Victorian Small Business Commission (VSBC)

The VSBC can help solve debt disputes between businesses or between businesses and government. The commission can provide free preliminary advice on a business’s legal rights and responsibilities, free pre-mediation help, and low-cost mediation.

Victorian Civil and Administrative Tribunal (VCAT)

VCAT can hear consumer and trader disputes under the Australian Consumer Law and Fair Trading Act 2012. A creditor needs to apply within 6 years of the dispute. A VCAT order for the payment of money can be enforced in the Magistrates Court.

Magistrates Court

The Magistrates Court has jurisdiction to handle debt recovery cases in Victoria for debts up to $100,000. Once a claim is initiated, the complaint is served on the debtor, who then has 21 days to pay the debt or choose to defend the matter. If the debtor does not respond within 21 days, a default judgment can be entered against them.

The court has five civil enforcement options it can apply.

Summons for oral examination

This order requires the debtor to attend court and provide details about their financial situation, including assets, income and liabilities. The information will help determine an appropriate enforcement method.

Warrant to seize property

This order authorises a sheriff to attend a debtor’s home or business in Victoria 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.

Attachment of debt

This order allows a person to recover the debt from a third party, who is known as a garnishee. Money can be sought from any party that owes money to the debtor.

Attachment of earnings order

This order allows a creditor to collect money directly from a debtor’s income but only if no other enforceable action is in place. This order will not be made when the debtor’s only income is from Centrelink. Payments should begin after seven days from when the debtor’s employer was served the order.

Instalment order

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 unless there is a change in the debtor’s ability to pay, or it can be proved the debtor provided inaccurate information to a court. This order will not be made when the debtor’s only income is from Centrelink.

Supreme Court

This court has unlimited jurisdiction to hear debt recovery claims for debt of more than $100,000. A  creditor has 6 years to file a matter in either the Supreme Court or Magistrates Court.

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

Sally Crosswell

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.

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