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I owe money

Please note:
For a period of 12 months starting 1 July 2019, the Australian Financial Complaints Authority’s (AFCA) jurisdiction will be expanded to allow them to consider previously unheard disputes falling within its terms of reference relating to conduct dating back to 1 January 2008.

Money and debt problems can be confusing and frightening if you don’t know your rights.

If you owe someone money, you're known as the debtor and the person or organisation you owe money to is called the creditor.

If you owe someone money and can’t afford to make payments, you should get help as soon as possible. You can contact a financial counselling service and get legal advice about your options. You may be eligible for financial hardship relief.

If you owe someone money and you don’t pay, your property may be seized (if it's a secured debt) or you could be taken to court. There are several ways a court can enforce a debt payment.

If someone has started legal proceedings against you to recover a debt or is threatening to seize your property, get immediate legal advice.

If someone is claiming you owe them money, but you don’t agree—get legal advice.

There are time limits for collecting debts. If someone asks you to pay an old debt, get legal advice about your options.

If you owe money you can’t afford to repay, you should see a financial counsellor and get legal advice. 

Debt and your rights

There are laws about what someone can and can’t do to recover a debt.

They can’t:

  • send you to prison
  • take and sell any property without a court order (unless they have a mortgage or other form of security over the property)
  • threaten, intimidate or harass you or your family and friends
  • take your children away
  • turn up at your home unless it’s at a reasonable time (usually between 7.30am and 9pm)
  • chase you for money after a certain amount of time has passed (there are time limits or debt recovery). 

They can:

  • write to you or call you to demand payment (at a reasonable time)
  • take you to court to recovery the money
  • ask the court to enforce payment of a debt (if they have a court order)
  • sell your debt to a debt collector
  • take and sell any property they have a mortgage or other form of security over.  

If someone has started court proceedings against you to recover a debt or is threatening to seize your property, get immediate legal advice.

Getting help with debt

If you owe money and you can’t afford to pay, you should get help as soon as possible.

As well as getting legal advice, a financial counselling service can help you with prioritising bills, accessing emergency relief, budgeting and negotiating payment plans or hardship relief.

If you have many creditors and owe a lot of money, a financial counselling service can help you work out if bankruptcy is a good option in your situation.

For more information contact the Australian Financial Security Authority.

Ombudsman services

You may also be able to get help from an ombudsman service.

Ombudsman services can investigate unfair lending practices. These services are free to use, independent of industry and can force a creditor to comply with their directions.

Different ombudsman services exist for different products such as:

The Australian Financial Complaints Authority (AFCA) has the power to stop legal proceedings before a judgment has been made to ensure a proposal for hardship relief has been properly considered. You should get legal advice before lodging a dispute with a financial services ombudsman scheme.

For more information, contact the relevant ombudsman.

Joint debts

A joint debt is when you borrow money with someone else and the debt is in both names. Usually when a loan is in both names, the debtors are jointly and severally liable—this means the creditor can chase one or both of you for the whole amount. If neither of you pay, then they can take either one of you or both of you to court to recover their money.

If you’re working and the other person isn’t, or the creditor has your address but not the other person’s, the creditor might only chase you.

Partner’s debts

You’re not usually liable for debts that are in your partner’s name only. You’ll only be liable if you were a joint debtor or if you gave a guarantee.

Find out more about dividing your property and debts after a relationship has ended.

Going to court —being sued

If you owe a debt and you can’t reach an agreement with the creditor about payment, the creditor can apply to a court or tribunal for an order saying you owe the money.

Creditors can start legal proceedings against you in the:

 

It may be possible to stop the court proceedings by lodging a dispute with the AFCA if the matter is about consumer credit. Generally, you’ll have 28 days to access an ombudsman scheme once you receive court papers or QCAT papers. If you don’t take action in this time, the creditor can ask the court to enter a judgment (money order) against you saying you owe the money. Get immediate legal advice.

You can try negotiating with the creditor after legal proceedings have started. Sometimes the creditor will agree to a new arrangement and to put court proceedings on hold while you are paying back debts under the new arrangement. You should get the creditor to give you a promise in writing not to continue court action while you are paying if you reach a new agreement. Get legal advice. 

It’s not a good idea to give the creditor permission to request a court judgment (money order) as a condition of a payment arrangement. Get legal advice.

QCAT procedures

If the creditor has applied to QCAT, they must serve you with an Application for minor civil dispute – minor debt (PDF, 307KB), which is available from the QCAT website. You must respond to this application within 28 days after you are given a copy of the application.

If you disagree you owe the money, or if you agree you owe some money but not the amount the creditor says you owe, you’ll need to file a Response to minor civil dispute – minor debt (PDF, 416KB), which is available from the QCAT website. Get legal advice.

You can now also respond to minor debt dispute using QCAT's online form.

If you know you owe the money, it’s not usually a good idea to file a response as it will probably end up costing you more money in the long run. Even if you know you owe the money, you should still get legal advice about your rights. If you don’t respond, the creditor may apply to the tribunal for a judgment (called a default judgment) by lodging a Request for decision by default – minor civil dispute – minor debt (PDF, 340KB) and the tribunal can make an order saying you owe the money (money order).

You can apply to have a default decision set aside by lodging a Form 55 – Application to set aside or amend a default decision (PDF, 266KB). You should get immediate legal advice if you want a default decision to be set aside.

If you file a response, QCAT may order you attend mediation. The aim of mediation is to get all parties to reach an agreement. If no agreement is reached at mediation, generally the matter will proceed to a hearing and a final decision will be made.

If the tribunal agrees you owe the money, they will make an order for you to pay (called a money order).

Visit QCAT’s website for information about:

Court procedures

If the creditor applies to the Magistrates Court, District Court or the Supreme Court, they must serve you with a Claim (UCPR) and Statement of Claim, which are available on the Queensland Courts website.

You must respond to this application within 28 days of being given a copy of the application.

If you don’t agree you owe the money, or if you agree you owe some money, but not the amount the creditor says you owe, you’ll need to file a Form 17 – Defence  which is available from the Queensland Courts website.

If you know you owe the money, it’s not usually a good idea to file a defence as it will probably end up costing you more in the long run. Even if you know you owe the money, you should still get legal advice.

If you don’t respond, the creditor may apply to the tribunal for a judgment (called a default judgment) by filing a Form 25 – Request for default judgment which is available from the Queensland Courts website and the court can make an order saying you owe the money (money order).

If you file a defence, the matter will go to a hearing and a final decision will be made. If the court agrees you owe the money, they will make an order for you to pay (called a money order). You may also have to pay the other party’s legal costs.

Visit the Queensland Courts website for information on the application process for money disputes for people who are representing themselves, including forms you will need if you want to respond to a claim.

How to find out if a money order has been made against you

If you know which court and which registry (eg Rockhampton District Court), you can find out if a money order has been made against you by:

 

If a money order has been made against you, it will show up in your credit report.

You can access your credit report for free. Be aware that if you request a copy of your credit report, your contact details will be updated on your credit file and will then be available to any creditor who wants to check your credit report. 

Enforcing a money order

QCAT has information on how a creditor can enforce a QCAT decision, including how to enforce a minor civil dispute decision.

The Queensland Courts also provide information on how a creditor can get money after judgment.

Once a money order is made by a court or QCAT, a creditor can apply to the court to enforce the money order.

They can apply to the court:

  • for an enforcement hearing summons
  • for an enforcement warrant to redirect earnings or debt
  • for an enforcement warrant for seizure and sale of property
  • for a warrant for order to pay by installments
  • to make you bankrupt.

Enforcement hearing summons 

The creditor can make you go to court to answer questions about your financial position (eg if you own property or have other debts). This is called an enforcement hearing summons. It can help the creditor decide whether you own anything and whether it’s worth pursuing you for the debt.

You’ll be served with a summons to go to court for the enforcement hearing. If you don’t go, the court can issue a warrant to arrest you and bring you to court for the hearing, unless the creditor says you don’t have to attend because they are satisfied with the information you have given them before the hearing date.

If you attend court, you can agree to weekly or fortnightly payments and the court can order this.

If you’ve been served with an enforcement hearing summons, get legal advice.

Enforcement warrant to redirect earnings or debt

If you have a job or have money in the bank, the creditor can apply for a warrant to redirect earnings or debt. This allows the creditor to get money from your employer, bank account or from someone else who owes you money.

If your only income is from Centrelink, the creditor can’t get this type of warrant.

Enforcement warrant for seizure and sale of property

If you own property, the creditor may apply for an enforcement warrant for seizure and sale of property. This allows the creditor to sell things you own to pay back the debt.

There are some types of property that are protected from these types of warrants (called essential property). These are the same assets you may keep if you go bankrupt.

Warrant for order to pay by installments

You or your creditor can apply to the court for a warrant for the debt to be paid by installments if you can’t afford to pay it all back at once.

The court will look at your financial situation and decide whether the payment proposal is reasonable.

If the court agrees, the creditor can’t take any other action to get the debt paid.

You should get legal advice. 

Bankruptcy

If the debt is over $5000, then the creditor can take steps to bankrupt you. This is more expensive for the creditor than the other options. You should get legal advice. Find out more about bankruptcy.

Voluntary bankruptcy

In some situations, it might be a good idea to become bankrupt— giving you a legal right to protection from your creditors. 

You should get legal advice before deciding to go bankrupt. There are some serious consequences of bankruptcy and not all debts can be included in a bankruptcy.

What to do if a money order has been made against you

Once a money order has been made against you, there are still things you can do to resolve the matter.

You can:

  • negotiate a payment arrangement with the creditor
  • apply for a warrant for payment of debt by installments
  • declare bankruptcy voluntarily.

Negotiate a payment arrangement

If you can pay the debt by installments after the money order has been made, you can negotiate with the creditor about what amount of money can be paid. You should get help from a financial counselling service and get legal advice before negotiating a payment arrangement.

Apply for a warrant for payment of debt by installments

You can apply for a warrant for payment of debt by installments. If you make a reasonable offer of payments and the creditor won’t agree, you can apply to the court to order the payment of the debt by installments. If the court agrees, the creditor can’t take any other action to recover the debt.

Debt collectors

A debt collector is someone who collects debts on behalf of a business, and can be:

  • a representative of a creditor
  • an independent debt collection agency.

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have published a Debt collection guideline for collectors and creditors.

Debt collectors must be licensed and have to comply with debt collection guidelines.

A debt collector must not:

  • use physical force or coercion
  • harass you unreasonably
  • try to mislead or deceive you
  • take unfair advantage of any vulnerability (eg disability).

If you think a debt collector is acting unfairly or isn’t complying with the debt collection guidelines, you can make a complaint to the ACCC or ASIC.

If you’re being harassed by a debt collector, you should get legal advice.

The ACCC has information about dealing with debt collectors.

Time limits

There are time limits for debt recovery. If someone is chasing you for an old debt, you should find out if a money order has been made against you—and if it has— when it was made.

If it’s been more than 6 years since you first owed the debt, you should get legal advice about whether the creditor can still enforce the debt against you.

Do I need legal advice?

You may need legal advice if you:

  • are struggling to pay a loan and there is a mortgage over your home
  • are struggling to pay a personal loan or credit card
  • have notice that your creditor is going to repossess your home or another asset
  • need help negotiating with your creditor
  • receive a summons or other papers from a court or QCAT
  • want to know about asking the court for an order to pay by installments
  • are considering bankruptcy because you can’t pay your debts
  • think an order has been made against you.

How to get legal advice

We don’t give advice on business debts or disputes about business partnerships, or debt-related court proceedings outside of Queensland.

We may give general legal advice to people who owe money or who are in debt in Queensland. Our Consumer Protection Unit can give specialist legal advice and help with disputes with credit providers and insurers.

Our Farm and Rural Legal Service gives help and advice to Queensland rural producers who have severe debt related problems, are in dispute with their lenders, or are facing financial hardship relating to their business or primary production.

The following organisations may also be able to give legal advice:

Caxton Legal Centre Consumer Law Service gives free specialist legal advice to people with consumer and consumer credit legal problems, including loans, bankruptcy, debt collection, mortgage brokers and financial advisors.

Gladstone Community Advisory Service gives free legal advice about consumer matters.

Cairns Community Legal Centre - Consumer Law Service gives legal help in the areas of consumer credit matters, consumer product disputes, consumer service disputes, consumer debt matters, bankruptcy and other consumer law matters for socially and financially disadvantaged members of the community.

LawRight Self Representation Service (Federal) gives legal advice and help to people involved in civil proceedings in the Federal Circuit Court or Federal Court for matters involving bankruptcy and consumer law. The service may also help with drafting documents and correspondence relating to your legal matter. They don’t provide representation.

LawRight Self Representation services (state courts) gives free legal advice and help to people who are involved in civil proceedings before the Brisbane District Court, Brisbane Supreme Court or Queensland Court of Appeal. The service may also help with drafting documents and correspondence relating to your legal matter. They don’t provide representation.

LawRight Self Representation Service (QCAT) gives free legal advice and help to people at the QCAT. The service may help with drafting documents and correspondence relating to your legal matter. They don’t provide legal representation.

LawRight Mental Health Law Clinic gives legal advice on civil law issues arising as a result of a person's mental health problem, including credit or debt law issues.

Students Legal Service - University of Queensland gives free legal advice to UQ students, including advice about consumer matters and responding to letters of demand.

National Legal Aid can refer you to another Legal Aid commission if your debt or court proceedings are in another state.

Queensland Law Society can refer you to a specialist private lawyer for advice or representation.

The following organisations may be able to give legal advice for business-related matters:

Arts Law Centre of Australia gives advice and information to artists and arts organisations on a wide range of legal and business matters relating to the arts industry, including contracts, copyright, business names and structures, defamation, insurance and employment. Fees may apply for some services.

Queensland Law Society can refer you to a specialist private lawyer for advice or representation.

Who else can help?

These organisations may also help with debt-related matters. They don’t give legal advice.

Australian Financial Complaints Authority (AFCA) gives independent dispute resolution for unresolved complaints about financial services providers and credit reporting agencies.

The Australian Competition and Consumer Commission (ACCC) has information about:

The ACCC and ASIC produce a publication about your rights and responsibilities when you owe a debt, called Dealing with debt collectors: your rights and responsibilities.

ASIC's MoneySmart website has information on how they may be able to help with disputes about financial products and services.

The MoneySmart website gives independent guidance for consumers making decisions about their personal finances, including information about:

Australian Financial Security Authority gives information about bankruptcy, including how to become bankrupt, making a person bankrupt, what debts are covered, consequences of bankruptcy and more.

Office of Fair Trading – gives information and help to the public on a wide range of consumer related issues, including:

Office of the Australian Information Commissioner handles complaints about misuse of personal information and inaccurate credit reports.

Queensland Civil and Administrative Tribunal can hear:

You should try and first resolve your dispute with the other party before asking the QCAT to hear your dispute.
The following Australian credit reporting agencies can give you with a free copy of your credit history:

Energy and Water Ombudsman offers a free service to help resolve disputes with electricity, gas or water suppliers.

Telecommunications Industry Ombudsman provides free alternative dispute resolution scheme for unresolved complaints about telephone or internet services.

These organisations may also help with business-related matters. They don’t give legal advice.

Australian Competition and Consumer Commission has information and guides for franchisees, franchisors, and a Franchising Code of Conduct.Chamber of Commerce and Industry (Commerce Queensland) is a non-government organisation delivering a broad range of services and represents business interests to governments at all levels.

Master Builders Association provides business services to employers and contractors in the building and construction industry.

Small Business and Family Enterprise Ombudsman (Link to website should go here) acts as an advocate for small businesses and family enterprises; provides access to dispute resolution services to help businesses resolve disputes without resorting to costly litigation and ensures government policies take into account the needs of small businesses and family enterprises.

Bond University Law Clinic gives free legal help to members of the public thinking about starting a small business, small business owners and registered not-for-profit organisations about legal issues such as business structures, intellectual property, consumer protection and competition regulation human resource management and industrial relations, disputes, contracts, franchising, leasing, debt recovery and licensing. They don't formally represent clients in legal disputes.

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