A debt may arise in many circumstances such as an unpaid invoice or account, a dishonoured cheque, unpaid rent or debt incurred from a contract for goods and services. Quite often, people may not aware there is a debt to pay or receive to/from a person/organisation. For example, there might be a cleaning service contract stating that a sum of amount is payable upon the completion of the service provided, however the cleaning service provided is unsatisfactory. In this situation, the primary issue is a breach of contract or negligence due to a lack of skills and care when the service is provided rather than the debt recovery. It is crucial to initiate a legal proceeding against the correct cause of action; otherwise, there may be an unnecessary expense and time wasted.

 

The following steps are normally taken to recover the debt by legal means:

  1. Sending a letter of demand; and
  2. Commencing a legal proceeding.

 

A letter of demand

It is a way to negotiate with the other party (“debtor”). It is the first step normally take before commencing the legal proceeding in the court. The letter of demand must state the following contents:

  • Explaining the circumstances of the debt;
  • The sum of the amount that you believe the debtor owes you;
  • Explaining why the debtor owes you the specified amount;
  • Method of the debts to be paid;
  • Due date of the debts to be paid; and
  • Following consequences, if the payment is not made within the specified due date.

The purpose of the letter is not to harass, threaten or intimidate the debtor. It must not attempt to mimic official court documents when writing the letter of demand. Once the letter of demand is sent, the debtor will either choose to respond or ignore the letter. If the debtor ignored the letter, or their response is unsatisfactory, the matter can be proceeding to the Queensland Civil and Administrative Tribunal (QCAT) or the relevant courts in accordance with the amount of claim.

 

 

Where to initiate debt recovery proceeding in Queensland

The QCAT and each court have monetary limitations to handle the debt recovery proceeding.

  • Queensland Civil and Administrative Tribunal (QCAT) – up to $25,000.00.
  • Magistrate Court – Over $25,000.00 and up to $150,000.00.
  • District Court – Over $150,000.00 and up to $750,000.00.
  • Supreme Court – Over $750,000.00.

It is important to remember that once commence the legal proceeding in inadequate court according to the monetary limitations addressed above, it may encounter unnecessary expenses and time-delay because the court may direct the matter to the lower or upper court.

 

How to initiate the legal proceeding in Queensland

When decide to commence the legal proceeding in Queensland, an application to the relevant court or QCAT according to the monetary scale above must be filled. Each court may have a different format of an application form, so check the application form if it’s correct before intending to lodging them.

Once the application form is filled, this application document must serve to the respondent (Debtor) within 28 days from the date of filing the application. Then, the respondent has 28 days to either choose to respond, counter-claim or ignore the application. If there is no response from the respondent made within the time frame, then default judgement to the court can be applied. If the respondent does respond, the respondent must serve the response. Then, the hearing date will be set, and the decision will be made accordingly.

 

Enforcing the decision or an order

For the QCAT decision, the parties are obliged to comply with the decision when the decision is made. If any fails to comply with the decision, an enforcement warrant to the Magistrate Court can be processed after QCAT decision is registered in the Magistrate Court. The enforcement warrant allows seizing and/or sell the debtor’s property to pay the sum of debt according to the QCAT decision.