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Deciding whether to take legal action

If the debtor refuses to pay the debt, there are five options:

  1. Offering the debtor an Enforceable Payment Agreement
  2. Further negotiation
  3. Mediation
  4. Commencing legal action
  5. Writing the debt off

1. Offering the debtor an Enforceable Payment Agreement (EPA)

Instead of taking legal action, or at any stage after you have started legal action, you can offer an Enforceable Payment Agreement to the debtor. An EPA is an agreement for the debtor to pay the debt in instalments, and that the creditor will not commence a legal action or report the debt to credit referencing agencies. If the debtor defaults on the EPA, the EPA and an affidavit verifying it can be accepted as proof of the agreement and judgment can be given.

The EPA form (Form 1B) is available from the Magistrates Court or the Magistrates Court website.

2. Further negotiation

Further negotiation may be an attractive option, especially if the debtor indicates they may be able to pay the debt in the future. Use the same techniques described in ‘Negotiation with the debtor’ above. Consider suggesting an EPA as part of your negotiations.

3. Mediation

Mediation is a process where both parties agree to sit down in the same room with a mediator to resolve their dispute. The mediator is a neutral third party who helps the parties discuss the problem. However, it is up to the parties themselves to arrive at a solution. Mediation can be seen as advantageous compared to going to court because:

  • it is an informal process in comparison to the court process, with less stress on the parties
  • the mediator will not decide on how to settle the matter – this is for the parties to decide
  • the parties have more control over the process and outcome
  • free mediation services are available, whereas legal action involves court fees
  • mediation generally gives a quicker resolution than going to court
  • the privacy and confidentiality of the mediation process is assured (parties sign a confidentiality agreement before the first mediation session and, if both parties are in agreement, the outcome can remain confidential)

The Magistrates Court offers a mediation service. This is available once you have sent the debtor a Final Notice of Claim (Form 1A) or you have commenced legal action in the court (see 'Giving notice of intention to sue'). If you come to an agreement as to how to pay the debt, ensure you put it in writing. An Enforceable Payment Agreement (Form 1B) can be used for this purpose.

4. Commencing legal action

There are several factors to consider before taking legal action.


Can you prove that you are owed money by the debtor? Do you have documentation of the debt such as an invoice, or witnesses who will confirm your version of events? Do you have a text message, letter or email from the debtor that confirms the debt?


A Minor Civil Claim in the Magsitrates Court can be settled at any time. However, it will be some months before a trial occurs if the debtor does not agree to pay the debt. Enforcing the judgment will take some time after this and the debt may not be paid in full straight away but in instalments.

If you are representing yourself, you would need to be available in court at the time set for your directions hearing and trial.


Fees need to be paid when:

  • you give notice of intention to sue ($22.70 to file a Notice of Claim using the Court Administration Authority's online portal; $54.50 to issue a Final Notice of Claim (Form 1A) through the Magistrates Court Registry and no fee if you send a letter of demand. Fees as of 1 July 2019).
  • you file a Minor Civil Claim ($153 - as of 1 July 2019)
  • if you need to enforce the judgment (the amount varies according to the method of enforcement used – check the Magistrates Court website fees schedule.

All these costs are usually recoverable from the opposing party if you win.

Other factors

  • Do you wish to preserve the relationship with the opposing party(s) or others?
  • Will mediation of further negotiation be more likely to produce a desirable result?

5. Writing the debt off

If negotiation and mediation are not successful or possible, and if any of the above factors mean that you do not wish to take legal action, then you can choose not to recover the debt, that is, you can ‘write the debt off’. In some cases, a business debt may be tax deductible.

Deciding whether to take legal action  :  Last Revised: Thu Jun 27th 2019
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.