Debt Recovery in Queensland: Your Options Explained
By Adrienne Hollis
If you are owed money, understanding your options for debt recovery in Queensland is important. This article outlines the steps and legal avenues available to recover debts.
Letter of Demand
Before initiating any legal proceedings, we can assist you with drafting a letter of demand. This formal communication requests the repayment of a debt, or the fulfillment of an obligation specified in an agreement. A letter of demand is typically the final step before initiating legal action and should be taken seriously.
Where to Start Legal Proceedings
The appropriate venue for a debt recovery action depends on the amount of the debt:
- Up to $25,000: Queensland Civil and Administrative Tribunal (QCAT)
- $1 to $150,000: Magistrates Court
- $150,000 to $750,000: District Court
- Over $750,000: Supreme Court
QCAT
QCAT handles debt disputes involving individuals, businesses, or companies for amounts up to $25,000. These debts may include outstanding invoices, overdue rent, or unpaid loans. To begin a QCAT application, the creditor completes an application form and submits it to the tribunal. The debtor is then formally notified of the claim via personal service and given 28 days to either settle the debt or contest the claim. We can assist you in preparing your QCAT application.
QCAT processes minor debt disputes in two scenarios:
- Claims under $1,500 proceed directly to a hearing without mediation; or
- Claims over $1,500 undergo mediation first, and if unresolved, are scheduled for a hearing.
We can also assist with the enforcement of QCAT orders or provide advice on navigating the QCAT application process.
Court Proceedings
To initiate court proceedings, the creditor submits a claim and a statement of claim to the Magistrates Court, District Court, or Supreme Court, depending on the debt amount. These documents must be personally served upon the debtor. The debtor will then either take no action, pay the debt, or contest the claim by filing a defence. If the debtor takes no action, the creditor can apply for default judgment 28 days after serving the debtor. Once the court issues a judgment, the creditor will either receive payment or can begin the enforcement process.
If the claim is defended, the matter will likely be referred for mediation or alternative dispute resolution before any hearing or trial.
Once a judgement is ordered it can significantly impact a debtor's credit rating for up to six years and enforcement proceedings may involve measures such as seizing assets (vehicles or homes) or garnishing funds from bank accounts or wages.
For individual debtors, there is the possibility of pursuing a Bankruptcy Order (Sequestration Order). For company debtors, initiating the process of winding up the company may be an option if they are unable to repay the debt within a specified timeframe.
There is a six-year limitation period from the time the debt was incurred to initiate any debt recovery action.