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For Creditors

The information in this section is aimed at creditors who are owed debts of no more than $12 000 (which is the limit for claims in the Civil (Minor Claims) Division of the Magistrates Court of South Australia as of 1 August 2016).

The information is largely reproduced from our booklet How to Recover a Debt.

If you are owed a debt as a subcontractor or supplier in the building and construction industry, then you may be able to make a claim under the Building and Construction Industry Security of Payment Act 2009 (for further detail see Debts in the Building and Construction Industry).

Things to consider before pursuing a debt

Proving your debt

Whenever you are owed a debt you should have proof that the debt exists and proof of the debt’s value. You should keep copies of any agreements, invoices, emails, letters or other documents that show how much money is owed, and the time, date or circumstances of the debt.

When making a verbal agreement, write down any terms or conditions of the agreement and the time and date that it took place. In the case of a verbal agreement, it can be useful if there is a witness who saw the agreement take place or saw the debtor refuse to pay. Evidence such as a bank transfer or cheque records may also substantiate the verbal agreement.

Time limits

Legal action to recover a debt must be commenced within six years from the date when the debt first came about. If, during that time, the debtor acknowledges or confirms the debt (by making a promise in writing signed by the debtor or their agent to pay the debt) then the six year period begins again from that date.

Negotiation with the debtor

Communication with the person who owes you money is important. Most debts can be resolved if both parties remain courteous and reasonable. Keep in regular contact with the debtor by mail, email or telephone so the debt does not fall to the back of their mind. Keep a copy of any correspondence and a record of phone calls, including the date and time they were made and what was said.

Find out if there is a reason the debtor cannot pay you. Perhaps they can afford to pay you part of the debt each month. Remember, a court will never place a person under severe financial hardship to pay a debt, so there is no point asking for more than the debtor can afford. Debtors are more willing to pay their debts if the creditor is polite and does not make unreasonable demands. If the debtor feels they are being treated rudely or unfairly, they will often ignore requests for payment or pay other debts before yours. A debtor who genuinely cannot afford to pay will be honest with you so long as you treat them fairly.

Rules of conduct when pursuing a debt

When pursuing a debt there are strict rules which apply to your behaviour.


  • demand money without saying who you are and how much money is owed
  • demand more money than is actually owed
  • continue to demand money from someone who denies they owe money without making further inquiries as to whether your demands for the money are valid
  • contact people who know the debtor, for example a debtor’s employer, friends, relatives or neighbours, unless you are doing so to get the debtor’s address
  • blackmail a debtor – this includes threatening, or making reference to, possible criminal proceedings if the debt is not paid
  • pretend to be authorised in some official capacity to claim or enforce payment of a debt

This behaviour is likely to anger the debtor will not be as effective as being polite, and may be illegal. A letter of request is a way of formally asking for payment of the debt. It is not a necessary step in commencing legal action.

See Fair Trading Act 1974 s 43

See also ASIC's Regulatory Guide 96 Debt collection guideline: for collectors and creditors.

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.

Enforceable Payment Agreements

Sometimes as a result of sending a Notice of Intended Claim or following letters of demand it becomes clear that there is no real dispute that a sum of money is owing . If an agreement can be reached to repay by instalments there is now an option for the parties to enter into an Enforceable Payment Agreement (EPA).

The advantage to the creditor is that if the debtor falls behind in making two payments a claim can then be issued for the outstanding balance, but the debtor will not be allowed to file a defence to the claim. Instead the creditor will be able to obtain a judgment straight away which can then be enforced like any other judgment.

The advantage to the debtor is that if they abide by the agreement they do not get an adverse credit rating and they do not have to pay the legal costs associated with a claim being issued through the Magistrate's Court.

Finding out who to sue

The first step in making a claim is to find out exactly who you should sue. If you do not put the correct person’s name or business name on the forms, you may have difficulty obtaining judgment or a judgment made in your favour may be set aside. If you do not find out the correct and current address, the debtor may not receive your forms and you may have to start the whole process again.

Similarly, you need to identify yourself correctly on the claim form. If the debt is owed to your business or partnership, use this name on the claim form.

An action can be brought against a person, a business (sole trader or partnership) or a company. If you are not sure who to sue, check any contracts, invoices that you have issued or emai or other type of correspondence. If you have an ABN for the person or entity, you can also check the Australian Business Register, which should identify if you have been dealing with a sole trader, partnership or company. Searching this register is free.

NB the Australian Business Register is different from the Australian Business Name Register - see further information below.


To find the address of a private person:

  • see if any documents contain the debtor’s address
  • ring the person and ask them for their address
  • check the White Pages
  • check the electoral roll


To find the business (sole trader or partnership) owner's name and the correct business name and address, you can search the Business Name Register on the ASIC Connect website (Business Name Register search). You should name the individual or partners (one or more names) followed by Trading As the business name: John Smith T/A John's Car Repairs.


For a company, you must use the company's name and registered address on any documentation, not the name and address of individuals running the company. To find the correct company name, you can search for it using the company ABN or ACN (these numbers should be on any documentation you have from the company) on the ASIC Connect website (Company Register search).

To get the registered address of a company, you can:

Further information can be obtained from ASIC on 1300 300 630.

Giving notice of intention to sue

Before commencing proceedings in court, notice of intention to sue should be given to the debtor. If no notice of intention to sue is given, the costs of filing the claim will not be recoverable. Notice of intention to sue can be given by EITHER filling out and serving a Final Notice of Claim (Form 1A) OR sending a Letter of Demand.

Final Notice of Claim

A Final Notice of Claim gives notice to the defendant that you intend to start an action to claim the debt owed to you. This form can be obtained from the Magistrates Court Registry or or from the Magistrates Court website online (click here). There is a cost for the form. The Registry will stamp the form, but you must post it yourself; the court will not do it for you.

After serving the form on the defendant, you must wait a minimum 21 days for a response before taking any further action. Send an Enforceable Payment Agreement with the Final Notice of Claim if you are willing to accept payment in instalments.

Letter of demand

A letter of demand is a formal request that the debtor pay you the money owed. A letter of demand can be used instead of a Final Notice of Claim but must include:

  • the date the letter was written
  • the amount owed
  • why the debt is owed (e.g. there was a contract, or services were provided)
  • a demand for payment within 21 days from the date of the letter
  • a statement that you intend to take legal action if the money is not paid within 21 days
  • copies of agreements or invoices if applicable
  • a warning that the court can order the debtor to pay the costs of any legal proceedings should the debtor fail to pay on demand

See below for a sample letter of demand.


There are two ways you can serve a Final Notice of Claim or letter of demand:

Regular post

Keep a copy of the document and make a record of the date it was sent. A posted document is assumed to have been received by the person it was addressed to.

Registered post

Registered Post provided proof of receipt of the document. You can organise and pay for your document to be sent by Registered Post at any post office. While using Registered Post shows the letter was sent, it is not strictly necessary.

Starting proceedings in the Magistrates Court

If the debtor does not pay the debt or try to negotiate within 21 days of being served with a Final Notice of Claim (Form 1A) or letter of demand you can begin formal legal action. You must allow the debtor 21 day to respond before initiating any court action otherwise you will not be able to claim any costs if you win.

Step 1:

Fill out a Minor Civil Claim (Form 3), which you can get from the Registry or from the Magistrates Court website online (click here) and lodge it with the Registry. You will need four copies of the Claim. A fee is required to lodge the form.

Step 2:

Serve the claim on the defendant:

  • The court can post the claim for you – there is no fee for this and it is the most usual way of serving the claim.
  • If there is some doubt about whether the debtor is at the address on the claim, you can deliver the claim personally or have a Sheriff’s Officer serve the claim for you. To have a Sheriff’s Officer serve the claim for you, you will have to pay a fee.
  • If you serve the claim yourself, you must attach a multilingual notice (Form 17).
  • After serving the claim you must also fill out and file with the Registry the proof of service form (on the back of one of the copies of the claim form), explaining how you served the claim.

Possible responses from the defendant

  1. No response
  2. Admission of the claim
  3. Denial of liability
  4. Counter claim

1. No response

If the defendant does not respond within 21 days, you can apply for judgment to be signed in your favour without the need for a court hearing. To do this complete a Request to Registrar (Form 18) and file it with the court with proof that a Minor Civil Claim (Form 3) has been served on the debtor, and that you have waited at least 21 days for a reply.

This judgment can be set aside if the defendant can show they did not receive the claim. This is why it is important to find out the defendant’s correct address, and, if there is any doubt about the address, to have a Sheriff’s Officer serve the claim or serve it personally yourself.

2. Admission of the claim

If the defendant admits the claim and agrees to pay, make sure you negotiate a specific final date for payment. If the defendant does not pay by the agreed date, follow the process set out above for having judgment signed, and then apply for an investigation hearing.

The defendant can admit liability for all or part of the debt owed by filing an Enforceable Payment Agreement (Form 1B) with the court. If the defendant only admits part of the debt and you aren’t satisfied with that, you can continue with the action. However, you may have to pay the defendant’s costs if the court awards you no more than what the defendant paid into the Court.

3. Denial of liability

  • The defendant has 21 days to file a defence from the time a claim is served.
  • A defendant has to complete a Defence (Form 4) and file it at the Magistrates Court Registry.
  • A copy of the defence will either be sent to you by the Court or by the defendant.

4. Counter claim

  • If the defendant thinks they have a claim against you, the plaintiff, they can complete and file a counterclaim. This is a Form 5 from the Magistrates Court.
  • The Counterclaim (Form 5) needs to be filed with the Defence (Form 4), and, if for any reason your claim does not proceed or is dismissed, the counterclaim can still continue as a separate action.
  • If you have a counterclaim filed against you, the Court assumes you are defending it therefore you do not need to file a separate defence.

Going to court

Directions hearing

Once a defence has been filed, the court will post out to both parties the date, time and place of a directions hearing. A directions hearing is not the trial but is held to determine the position of each party and to encourage a resolution of the matter. You do not need to bring any witnesses to a directions hearing. Mediation may be suggested by the court.

Examples of orders which may be made at a directions hearing are:

  • an order for discovery, that is, that one or both of the parties must provide copies of the documents they will use in court to the other party
  • an adjournment for settlement terms – if the parties appear to agree in general but not on the finer points, they will be given more time to finalise their agreement
  • a consent order and payment arrangement filed – if the defendant admits to the debt and agrees to a payment arrangement
  • a date for trial may be set if no agreement is reached

It is important that you understand and comply with any orders made by the court at the directions hearing. If you are confused about what orders the court has made, you may get a copy of the court record of your hearing from the Magistrates Court Registry. If you do not understand the order, you may ask at the Registry.


Most debt matters do not make it to trial. If your matter does make it to trial you should be prepared in the following ways:

  • ensure your witnesses are available on the day of the trial
  • ensure you have all relevant documents
  • arrive at court 15 minutes early and check the time and location of your hearing on the court notice board

You will be called into the courtroom when it is time to hear your matter. The witnesses will be asked to wait outside. You should stand whenever the Magistrate enters or leaves the court and address him or her as ‘Sir’ or ‘Madam’ or ‘Your Honour’.

The procedure for Minor Civil Claims is less formal than in most other courts. The Magistrate will conduct the hearing more like an inquiry, and will ask questions of the parties, ask to see documents, and ask any questions of any witnesses. Speak slowly and clearly as the Magistrate and their clerk will need to write down details. If you are confused about the procedure you may ask the Magistrate questions.

Lawyers are only allowed in certain circumstances (e.g. if the other party is a lawyer, or if all parties agree or the court is of the opinion that a party would be unfarily disadvantaged without a lawyer and gives permission) [See Magistrates Court Act 1991 (SA) s 38(4) and Magistrates Court (Civil) Rules 2013 (SA) r 13(4)].


Once the trial has finished the Magistrate will decide if the debt is owed to you. Whoever receives judgment in their favour has “won” the case.

If you have won, you should request the Magistrate award costs and interest on your claim. Judgment in your favour may be for the entire debt or part of it. A judgment in your favour means that the court recognises that you are owed the debt and that it must be paid.

However, a judgment is no guarantee that money will be paid and it is up to you to enforce the judgment. Even with a court judgment, you cannot force someone to pay if they do not have the money.

  1. Enforcing judgment

    Many defendants will pay once judgment has been given but you may need to remind the debtor to pay the debt. If you do not think the debtor will pay, you can commence enforcement proceedings immediately after judgment. You generally have only six years from the date of the judgment to start enforcement proceedings [see Magistrates Court (Civil) Rules 2013 (SA) r 121]. A court judgment will be entered on the credit record of the debtor for five years. This means they may not be able to obtain credit or borrow money. In many cases, this may be incentive enough for them to pay the debt.
  2. Investigation Summons

    The first process in the enforcement of a judgment for a debt for less than $10,000 is an investigation hearing. If the debtor is present at court, you can ask the Magistrate to conduct an investigation hearing into the defendant’s financial position immediately after giving judgment. Otherwise, to instigate an investigation hearing you will need to fill out and file a Request to Registrar (Form 18). A date for the hearing will then be set. You can obtain a Form 18 from the Magistrates Court Registry or from the Magistrates Court website.

    If the debtor owns real estate or other types of property of value, a Warrant of Sale of the property can be requested (if the debt is over $10,000). If the debt is less than $10,000 but you want to ask for a Warrant of Sale as the first step, you need to make an application to explain why you will not accept a payment arrangement from the debtor.

    Before the Investigation Summons hearing, the debtor will fill out a form detailing their financial situation. This will include how much they spend on rent, bills, food and other expenditure. During the hearing you will have a chance to question the debtor on this information. The Registrar in charge of the hearing will then usually make an order for the debt to be paid in instalments. The court will only order the debtor to pay instalment amounts they can afford. If the court decides the debtor has no means to pay the debt, you may ask for an adjournment (usually for a year) so that the court can reassess the debtor’s circumstances at a later date.

  3. Examination hearing

    If the debtor fails to comply with two payments under the order made at the investigation hearing, you can apply for an examination hearing by filling out a Request to Registrar (Form 18). At this hearing the debtor will be asked to explain why he or she has not complied with the order from the investigation hearing. If the creditor’s circumstances have changed then the instalments to be paid under the order may be modified. If the debtor fails to appear at the investigation summons hearing, you can ask for an order that a Warrant of Arrest to be issued, and you will have 28 days to go to the Registry to request the issue of the warrant. There are additional costs associated with issuing a warrant.

Other options for Enforcement of a Judgment Debt

You may wish to consider other orders to enforce the payment of a debt. These can be made at any time after the investigation hearing. Other orders will not be made if there is a payment agreement in place from the investigation or examination hearings.

  1. Warrant for sale

    A warrant for sale can be issued in relation to either the debtor’s real property (land) or personal property (such as non-essential household items). To apply for a warrant of sale, fill in and file a Request to Registrar (Form 18). You can obtain a Form 18 from the Magistrates Court Registry or from the Magistrates Court website. If the debt is under $10000, the creditor must apply to the Court first and go before a Magistrate to explain why the debt should be paid from the sale of the debtor's property.

    Very few warrants for sale of real property will proceed to sales as the debtor will usually pay the outstanding amount before the property goes to auction.

    If you wish to apply for a warrant of sale of real estate you must first do a search at the Lands Title Office to discover whether the debtor owns any land (there is a small fee for this service) and enter the details of the title on the form. You must also give a written undertaking that you will pay for any costs involved in the auction of the property. These costs are recoverable from the debtor upon sale of the land.

    A warrant for sale of personal property authorises a Sheriff’s Officer to enter the debtor’s address and seize property of sufficient value to cover the debt. Certain items such as cars under a certain value, ordinary clothing and necessary household goods cannot be seized. Items which are under finance or jointly owned will not be seized. If the debtor is bankrupt, their property cannot be taken.

    Only about a third of warrants for sale for personal property are successful in recovering any money at all. Therefore you should consider whether it is worth applying for a warrant for sale given that there are costs to issue and the carry out the warrant. Try to find out whether the debtor owns more than one car or any valuable assets.

  2. Charging order

    A charging order allows the court to charge the property of a debtor. This means that the debt will be registered on the real estate of the person or on the assets of a company. If the property is sold then it will be subject to the charge and you have priority over the owner for the proceeds of the sale.

    To apply for a charging order you will need to do a search at the Land Titles Office to identify any property owned by the debtor. You will then need to make a Form 21 application. In the space provided write “charging order over (name of property) for the judgment debt of $...”.

  3. Garnishee order

    This is an order requiring direct payment to a creditor. Wages can only be garnisheed with the consent of the debtor and Centrelink payments cannot be garnisheed. However, money held in a bank account can be ordered to be paid to a creditor without the debtors agreement. Seek legal advice on the correct procedure for a garnishee order.
  4. Bankruptcy

    If the debt is for more than $5000 you may start bankruptcy proceedings against the debtor. If a person is declared bankrupt then all of their property (with exceptions similar to those for a warrant of sale) comes under the control of a trustee. You may then lodge proof of your debt (the judgment) with the trustee to receive a share of the profits from the sale of the debtor’s property if the debtor owns anything of value.

    Before you commence bankruptcy proceedings consider whether the debtor owns enough property to make declaring them bankrupt worthwhile. If they own real estate (check at the Lands Title Office) or if they have a position that they will lose if declared bankrupt, then the threat of bankruptcy may force payment of the debt. The cost of bankrupting someone should also be considered.

    The first step in bankruptcy proceedings is usually to serve the person with a Bankruptcy Notice. A Bankruptcy Notice is a form requiring the debtor to pay the debt within 21 days. This form is available on-line from the Australian Financial Security Authority (formerly ITSA). The cost of issuing a Bankruptcy Notice changes every year so it is wise to check the AFSA website fees and charges page for any updates.

    Once 21 days have elapsed from the service of the Bankruptcy Notice on the debtor, a creditor’s petition must be lodged in the Federal Circuit Court. There are fees associated with filing a creditors petition, which can be claimed back from the bankrupt estate, assuming that there are any assets for the trustee to seize. Current court filing fees for bankruptcy matters can be checked on the Federal Circuit Court's website fees page.

    Sending someone bankrupt is a complex and expensive process. You should seek independent legal advice before commencing bankruptcy proceedings. Further information on bankruptcy proceedings can be obtained from the AFSA website Sending someone bankrupt page. Information about filing creditor’s petitions is available at the Federal Court Registry, Level 5, Roma Mitchell Commonwealth Law Courts Building, 3 Angas Street, Adelaide or from the Federal Circuit Court website creditor's petitions page.

  5. Winding up a company

    Winding up a company is the equivalent of declaring a person bankrupt, although the end result for the company is that it is usually liquidated and then de-registered. If your judgment debtor is a company, you should seek legal advice from a private law firm regarding how to go about issuing the right documents. If a company has no assets and many creditors, spending the money on issuing winding up proceedings does not guarantee that your judgment debt will be paid, and you may also not recover your associated costs.
    For Creditors  :  Last Revised: Thu Jul 28th 2016
    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.