Debt for creditors
If someone owes you money then they have a debt to you - you are a creditor and the person who owes you money is a debtor.
Important: the laws about debts are not the same in all states. These questions and answers are for Queensland only. You always have to look at where the debt started and other surrounding circumstances - these are not always easy questions. If you have any doubts, ask a lawyer for legal advice.
On this page:
I lent someone money and now they won't repay it. What can I do to make them pay?
There are several things you can do to start the ball rolling. You can:
- contact the person and try to come to another agreement
- send a letter demanding payment (called a letter of demand)
- if the loan is to a company, you can send a formal notice (called a statutory demand) for the company to pay or be wound up. This is a complex procedure and you should ask a lawyer for legal advice
After that, if they still don't pay and you want to try to get your money, you'll need to sue (start court proceedings). There isn't anything else in the middle. If they won't talk to you or start paying again, then you can either forget about the debt or take court proceedings.
I want to claim for a debt in court, so what do I do now?
For most types of debts, even quite small ones (like an IOU for $300, or wages of $1,000) you have to file documents in the magistrates court.
If the amount owed to you is less than $7,500, you can do what's called a minor debt claim. This is still in the magistrates court, but it's a simpler procedure than filing a claim for a debt over $7,500.
You'll need to make sure that the person you sue (called the defendant on the documents) is the right person - so you need to find out whether you should be putting an individual or a business/company name on the documents.
Once you file documents in the magistrates court, you (not the court) have to arrange for the debtor to get the documents, that is to serve them on the debtor.
After the debtor is served, the debtor has 28 days from that day to file defence documents saying they don't owe you money, or don't owe you the amount you say they do. Sometimes debtors will file defence documents just to try to delay. This will usually end up costing them more money.
If the debtor doesn't file defence documents, you can apply to the court for judgment (called a default judgment) just by lodging more paperwork, and the court can make an order saying the debtor owes you the money (a money order).
It is usually not too difficult for the debtor to get rid of a default judgment. If the debtor does, the debtor then has to file defence documents.
If the debtor files defence documents, eventually you will go to court to argue the case at a trial. If the court agrees with you it will make an order saying the debtor owes you the money (a money order).
It is always a good idea to talk to a lawyer for legal advice before you file documents to try to make sure you don't file the wrong type of document or that you don't file documents against the wrong person.
I've got a court order for someone to pay me money within seven days. The seven days are up tomorrow, so I can just go to the court tomorrow and get paid, can't I?
No, you can't. When the court makes a money order, it's simply an order that the debtor must pay you, not pay money to the court.
If the debtor doesn't pay you, the debtor is breaking the law, but you still have to take the debtor back to court to try to get your money.
If the debtor has no property, you are left with a court order that says the debtor must pay, but still no money.
I lent my friend money but they didn't pay so I took them to court. Now I've got a money order against them but I still don't have the money. What can I do now?
There are several things you can do to try to enforce the money order, that is to get your money. For all of them you need to apply to the court. You can apply to:
- make the debtor go to court to answer questions about his/her financial position, like if the debtor owns property or has other debts . This is called an enforcement hearing summons. It can help you to decide whether the debtor owns anything and whether it's worth going further. The debtor is served with a summons to go to court to answer questions about his/her financial position - if the debtor doesn't go to court, the court can issue a warrant to arrest the debtor. If the debtor does turn up, the debtor can agree to weekly/fortnightly etc payments and the court can order this.
- get money from someone else who the debtor gets money from. This is called an enforcement warrant to redirect earnings/debt. If the debtor has a job and gets wages or has money in the bank you can apply for this warrant. If the debtor is on the dole or a pension you cannot use this type of warrant because it doesn't work for government benefits.
- force the debtor to sell things that he/she owns by getting a warrant which lets you organise for the debtor's property (except essential property) to be taken and sold. This is called an enforcement warrant for seizure and sale of property. The property must belong totally to the debtor - if the property is owned by the debtor and someone else this doesn't work.
- order the money order to be paid back by instalments over time, because the debtor can't afford to pay it back all at once. This is called a warrant for order to pay by instalments. The court looks at the debtor's financial position so that the court is satisfied that the repayment proposal is reasonable. If the court agrees, then you can't take other action to get the debt paid
- bankruptcy. If the debt is over $2,000 you can take steps to bankrupt the debtor - this is expensive, not very fast and you will usually only get a part of your debt anyway.
One thing you can't do is have the debtor sent to jail for not paying you.
Someone owes me money but they say that if I sue they'll just go bankrupt/apply to pay me $5 a week until the debt is paid. Can they do this?
Yes. A debtor can go bankrupt and can apply to the court to pay you an amount each week, but it probably won't be as little as $5.
Anyone can apply to go bankrupt. Lots of people don't want to do this, because although they can get rid of their debts, there are other consequences they may not like.
If the debtor can't afford to pay you back all the money in one go, the debtor can ask the court to order payment by instalments over time. The debtor has to give the court his/her financial position, and the court looks at this to be satisfied that the repayment proposal is reasonable. If the court orders payments by instalments, then you can't take other action to get the debt paid.
I got a money order against someone five years ago but they didn't own anything so I didn't see the point in going further. Now I've found out they've got some money or property. Is it too late to do anything?
No, it isn't. You have six years after the day the money order is made (unless the debtor goes bankrupt) to try to enforce the money order and get the money from the debtor.
Even if it has been more than six years, you can apply to the court to ask if you can keep trying to enforce the money order.
Legal Aid Queensland publish a free guide to making a minor debt claim
in the Queensland magistrates court. If someone owes you $7,500 or less, this kit may help you.