What is a debtor?

If you owe someone money then you have a debt - you are a debtor and the person you owe money to is a creditor.

The Australian Consumer Law and unfair contracts

In July 2010 and January 2011, new national laws were introduced to protect consumers from unfair terms in contracts. The Australian Consumer Law website provides information about these changes. These laws include changes to consumer contracts for financial products, and for the supply of financial services.

The Australian Securities and Investment Commission (ASIC) also has important information about 'standard form consumer contracts' which can include contracts for telecommunications, utilities, domestic building and finance agreements.

The Office of Fair Trading can also provide more information about quotes and contracts, including information about the types of contract terms that might be considered unfair.

The National Credit Law and consumer credit

The new National Credit Law came into effect on 1 July 2010 to protect consumers entering into consumer credit contracts. The law means that anyone who wants to lend you money must be registered or licensed, and they can't lend you money if they think the credit contract is not suitable for you.

You can read more about the National Credit Law and consumer credit regulation on the Australian Securities and Investment Commission's MoneySmart website.

Everything I owe is overdue. Is there anything I can do to stop them suing me?

The Queensland Civil and Administrative Tribunal has information about handling debt disputes, including information on what steps the creditor can take to recover a debt.

If your dispute is with another person, a business or a company and is for a fixed sum of money less than $25,000, they may be able to apply to QCAT to have the matter resolved.

If the amount owed is more than $25,000 they may start court proceedings.

Although a creditor can start court proceedings if you don't pay, they can't usually start court proceedings the minute you are one payment behind. If you don't pay, a creditor can apply to QCAT for debts up to $25,000 or start court proceedings if the debt is over $25,000. You can:

• contact the creditor and try to agree on a new repayment arrangement, at least for a time
• if you can show financial hardship, you can ask the credit provider to change (vary) the contract during the time of hardship and if the credit provider refuses, you can apply to court for an order to vary the contract.
• contact a financial counselling service which may be able to help you with a payment plan to take to the creditor
• ask a lawyer for legal advice. Like the financial counselling service, the lawyer may be able to help you with a payment plan to take to the creditor

I've split up with my partner and we have a loan in both names from the bank/credit union with repayments each month. As long as I pay my half they can't do anything, can they?

Yes, they can. Banks and other financial institutions don't care who pays, they just want their money.

Nearly always when a loan is in both names, the debtors are jointly and severally liable - that means the creditor can chase either of you for the whole amount each month, and if it gets to the point where they can take you to court, they can take either or both of you to court.

If you are working and your partner isn't, or the creditor has your address but not your partner's, the creditor might only chase you.

You are not usually liable for the debts of your partner. You will only be liable if you were a joint debtor or if you provided a guarantee.

Someone came to my door yesterday and gave me some papers saying I owe money to a finance company but there's no court date. What do I do now?

From 1 December 2009, the Queensland Civil and Administrative Tribunal (QCAT) hears disputes for claims up to $25,000. If a debt dispute was started in the court before 1/12/09, the court may transfer the matter to QCAT if it has not yet been heard or if it is in the early stages of a hearing. But if the court has started to hear the matter and is about to make a final decision, then it cannot be transferred to QCAT.

If you get court or QCAT papers, always ask a lawyer for legal advice. The lawyer will need to see the papers.

How can I find out if a court has made an order against me?

To find out if a court order has been made against you, you can order a free copy of your credit report, which will have this information. Your credit report also has information about your credit history, any requests for loans (including applications for mobile phones and utilities) and unpaid debts.

Note: If you request a copy of your credit report, your contact details will then be available to any lender who wants to check your report. To order your free credit report, contact Veda Advantage on 1300 762 207 or visit www.mycreditfile.com.au

Queensland Civil and Administrative Tribunal (QCAT) Procedures

QCAT provides information on their application process, including responding to applications for a minor civil dispute and the forms you will need.

If you have been served with QCAT papers you have probably been served with an application for a minor civil dispute.

You must respond to this application within twenty-eight (28) days after you are given a copy of the application. Otherwise, the applicant may apply to the tribunal for a default judgement against you.

If you know you owe the money, it's not usually a good idea to file a defence. It will probably end up costing you more in the long run.

Even if you know you owe the money, it's always a good idea to talk to a lawyer and get legal advice. You can still try to negotiate with the creditor after you've been served.

Unless otherwise ordered by the tribunal all minor civil dispute applications except tenancy matters will be referred for mediation by a person nominated by the Director of the Alternative Dispute Resolution Branch of the Department of Justice and Attorney-General.

QCAT provides information about mediation, including how to prepare, how to behave, and what happens after mediation.

If the applicant wants an application to be heard without it first being mediated they may request the tribunal to make that order. The request must be made in writing directed to the principal registrar and must state the reason for the request. After you have filed your response to the application you receive written notice notifying you whether your matter is set for mediation or hearing. You can also call the QCAT registry to find out.

The mediation may be conducted in person or by telephone.

If the dispute does not resolve, the mediator must assist the parties to agree upon a list of matters about which they agree and disagree (list of issues).

If a list of issues is agreed, the mediator must attach it to the mediation certificate and file it with the tribunal.

At the hearing the tribunal will hear from the parties and determine the application on the basis of the list of issues. The parties should use the list of issues to get ready for the hearing by preparing what they want to say about each issue and by bringing to the hearing any documents about it.

Court procedures

Queensland courts has 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.

If you have been served with court papers, you've probably been served with a Claim and Statement of Claim. If you have, there won't be a court date unless you file documents to argue about whether or not you owe the money.

If you don't agree that you owe the money, or if you agree you owe some money but not the amount in the papers, you'll need to file a defence.

You only have 28 days after you've been served to file defence documents. If you don't file a defence within that time the creditor can apply to the court for judgment just by lodging more paperwork (called a default judgment), and the court can make an order saying that you owe the money (called a money order).

If you know you owe the money, it's not usually a good idea to file defence documents. It will probably end up costing you more in the long run.

Even if you know you owe the money, it's always a good idea to talk to a lawyer and get legal advice. You can still try to negotiate with the creditor after you've been served.

Sometimes the creditor will agree to a new arrangement and agree to not keep going with the court proceedings while you are paying under this new arrangement. In this case you should get the creditor to give you a promise in writing not to keep going while you are paying. Ask a lawyer for legal advice about this.

I've got a court or Queensland Civil and Administrative Tribunal (QCAT) order saying I owe a lot more money than my original debt and I still can't pay it. What's likely to happen now?

The Queensland Civil and Administrative Tribunal 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 judgement.

Once an order is made by a court or QCAT, there are lots of ways a creditor can try to get the money you owe - this is called enforcing the money order. For all of them the creditor needs to apply to the court. QCAT judgments are enforced through the court as well. The creditor can do things like:

• make you go to court to answer questions about your financial position, like if you own property or have other debts. This is called an enforcement hearing summons. It can help the creditor to decide whether you own anything and whether it's worth going further. You get served with a summons to go to court to answer questions about your financial position. If you don't go to court, the court can issue a warrant to arrest you. If you do turn up, you can agree to weekly/fortnightly etc payments and the court can order this.
• get money from someone else that you get money from. This is called an enforcement warrant to redirect earnings/debt. So if you have a job and get wages, or you have money in the bank, the creditor can apply for this warrant. If you receive a Centrelink benefit, the creditor cannot use this type of warrant because it doesn't work for government benefits.
• force you to sell things you own by getting a warrant which lets the creditor organise for your 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 you - if you and your partner jointly own property then this doesn't work.
• get an order for the money order to be paid back by instalments over time, because you 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 your financial position to see whether the repayment proposal is reasonable. If the court agrees, then the creditor can't take other action to get the debt paid.
• bankruptcy. If the debt is over $5000 the creditor can take steps to bankrupt you - this is more expensive for the creditor than the other things.  If you own property jointly with someone else, your interest in that property is dealt with in the bankruptcy and the trustee may sell your interest in the property.

Remember that just as the creditor can ask for and get an order for the money to be paid back by instalments over time, you can go to court and ask for this. Or you can go into bankruptcy voluntarily - but this has other consequences which you may not want. Always ask a lawyer for legal advice or speak to a financial counsellor about what you can do and how it will affect you.

I went for a bank loan and the bank said it wouldn't lend me any money unsecured, but maybe I could get a secured loan. What's the difference?

Under the new National Credit Law which came into effect on 1 July 2010, anyone who wants to lend you money must be registered or licensed, and they can't lend you money if they think the credit contract is not suitable for you.

You can read more about the National Credit Law and consumer credit regulation on the Australian Securities and Investment Commission's MoneySmart website.

You can borrow money and give the creditor something which 'secures' the debt if you don't pay.

For example, if you borrow money to buy a house and then you sign a mortgage to the bank or other financial institution, your house is the security.

If you sign something which gives the creditor something for security, like your house, then if you don't pay, the creditor can eventually take your house. The creditor has to go through certain procedures set out in the law first, like giving you notice and some time to pay.

If you don't give something for security then the creditor has nothing to take without first going to court to get an order that you owe the money. The creditor can then try to enforce the order (see previous question and answer).

If you give the creditor security and the creditor sells the security but doesn't get enough to cover the debt so you still owe money, then the creditor can go to court and get an order that you owe the remaining money.

I owed money a long time ago.  Just recently I have been getting phone calls from some other company saying I owe the money and that they can send me to jail if I don't pay. Is this right?

No, it isn't. But you do need to find out if a money order has been made against you, and if it has, find out the date it was made.

Sometimes creditors sell your debt to another agency, so someone other than the original creditor could be chasing you because they bought the debt.

If it's more than six years since the debt was owing and nobody went to court and got a money order against you, then it may be too late for anyone to get a money order against you.

If the creditor did get a money order against you but it was made more than six years ago, then the creditor has to ask the court for leave to be able to enforce the debt at all (unless you went bankrupt).

Although the creditor can't get you sent to jail for not paying, if there is a money order against you and you get a summons to go to court and you don't turn up, the court can issue a warrant and have you arrested to take you to court. This is not the same as going to jail. You cannot be sent to jail for civil debts.

I've been given paperwork which says I have to go to court next week for an enforcement hearing, but I don't owe the money. What can I tell the court?

Both QCAT and court orders can be enforced through the courts. Once you get court papers saying you must go to an enforcement hearing, the creditor already has an order against you. It's too late at the enforcement hearing to try to tell the court you don't owe the money.

The enforcement hearing is for the creditor to get details of what you own and owe, and your entire financial position. The court won't be interested in listening to you saying you don't owe the money, because as far as the court is concerned, you do.

You can go to the court registry and ask to see the court file so you can find out when the order was made against you. The creditor might have got an order by default if you or someone at your last address were given court papers and you didn't file a defence.  In some cases you can get the order set aside, but you should get legal advice about this.

If you get given court papers, especially a summons to go to court, always ask a lawyer for legal advice.

I got knocked back for a loan and the bank told me there was some problem with my credit rating. I did get behind in a loan a few years ago but I paid it all out in the end. How can I find out about my credit rating?

Veda Advantage is an organisation which collects credit information in Australia.

If you have ever applied for credit then you have a credit history or credit file.

When you don't pay a loan and this non-payment is registered with Veda Advantage, it goes on your credit file and stays there for some years as part of your credit history.

If you apply for a loan, the bank or other lender will ask you to sign something which lets the lender look at your credit file.

You can look at your own credit file by contacting Veda Advantage. It's free if you ask in writing and wait for a few days - if you want it more quickly you can pay.

If you find a mistake on your credit file, like an overdue account that you have paid or an overdue account that is not yours, you will need to contact the lender and get the lender to contact Veda Advantage. You may also get help from Veda Advantage. Veda Advantage has its own guidelines that are set out on its website.