Debt Recovery
Recovering commercial and personal debts under NSW law, from a letter of demand through to judgment enforcement.
Debt recovery is the process of formally pursuing an unpaid debt in NSW, starting with a letter of demand and escalating through a statutory demand or Local, District or Supreme Court proceedings to judgment and enforcement. Vamp Law acts for creditors at every stage.
What does debt recovery involve?
Debt recovery is the process of formally pursuing an unpaid debt owed to a business or an individual in NSW. Vamp Law acts for creditors, from sole traders chasing a single overdue invoice to companies with a portfolio of aged receivables, recovering amounts through negotiation, statutory processes and, where necessary, court proceedings.
Every recovery matter starts with the same question: is the debt genuinely disputed, or is the debtor simply not paying? The answer changes the pathway Kyra Pastrovic recommends, and how quickly a matter is likely to resolve. Vamp Law also considers whether pursuing the debt is commercially worthwhile at all: legal costs and time can outweigh a small or genuinely doubtful debt, and part of an honest first review is saying so plainly when that is the case.
Debts do not stay recoverable indefinitely. In NSW, a simple contract debt is generally subject to a six year limitation period from the date it fell due, so acting sooner rather than later preserves the option to recover it through the courts if informal attempts fail.
What is the debt recovery process in NSW?
Letter of demand
A formal letter sets out the amount owed, the basis for the debt and a deadline to pay before further action is taken. Many debts are paid at this stage once a debtor understands the matter is being taken seriously.
Statutory demand (company debtors)
Where the debtor is a company and the debt is undisputed and over the statutory threshold, a statutory demand under the Corporations Act 2001 (Cth) gives the company 21 days to pay, secure the debt, or apply to set the demand aside.
Court proceedings
If the debt remains unpaid, proceedings are filed in the Local Court, District Court or Supreme Court of NSW depending on the amount claimed. An undisputed debt can result in default judgment relatively quickly; a disputed debt proceeds to a defended hearing.
Judgment enforcement
Once judgment is obtained, Vamp Law advises on enforcement options such as garnishee orders against wages or bank accounts, examination summonses to establish a debtor's financial position, and writs for the seizure and sale of property.
What if the debtor disputes the debt?
A debtor who genuinely disputes a debt can file a defence once proceedings are served, which moves the matter from a straightforward recovery claim into a defended civil dispute. Vamp Law reviews the basis of the dispute early, since a debtor sometimes raises a genuine cross-claim, for example alleging defective goods or services, which changes the strategy for recovering the original amount.
Where a dispute looks tactical rather than genuine, aimed only at delaying payment, Vamp Law advises on options such as applying for summary judgment, which asks the court to decide the matter without a full trial where there is no real defence on the facts. Where the dispute is genuine, the matter proceeds through the normal pleadings, evidence and hearing process like any other civil claim.
Who does Vamp Law act for in debt recovery matters?
Vamp Law acts for creditors: businesses owed money by customers or suppliers, sole traders chasing overdue invoices, and companies relying on personal guarantees given by a director. Clients recovering debts through Vamp Law include tradespeople, consultants, wholesalers and professional services businesses, each with a different typical pattern of aged receivables and a different appetite for pursuing smaller amounts. Kyra Pastrovic reviews the underlying contract or invoice trail before recommending whether to send a letter of demand, issue a statutory demand, or file proceedings directly.
How do personal guarantees affect debt recovery?
Many trade accounts and commercial leases include a personal guarantee from a company's director, so that if the company cannot pay, the director is personally liable for the debt. Vamp Law reviews the guarantee document itself before relying on it, since the wording, and whether it was properly signed and witnessed, affects whether it can be enforced.
Where a valid guarantee exists, recovery action can be taken against the guarantor personally as well as, or instead of, the company, which matters if the company itself has few assets. This is one of the reasons Vamp Law reviews the full contractual position at the start of a debt recovery matter, rather than looking only at the invoice or the amount owed.
What does it cost to recover a debt?
The cost of recovering a debt is usually proportionate to the amount owed and how far the matter needs to proceed. A letter of demand that resolves a debt costs a fraction of what a defended court hearing does. Vamp Law sets out a written costs agreement before starting work, and discusses realistically whether a costs order at the end of a matter is likely to cover the legal fees incurred in recovering the debt.
Frequently asked questions
An undisputed debt recovered through the Local Court can result in default judgment within around 6 to 8 weeks of filing, while a disputed debt that proceeds to a defended hearing typically takes 6 to 12 months, and enforcement can add further time if the debtor has no readily available assets.
Vamp Law gives clients a realistic timeframe at the outset, based on whether the debtor is likely to dispute the claim.
A letter of demand is a formal written notice to a debtor setting out the amount owed, the basis for the debt and a deadline to pay before legal proceedings are commenced.
It is usually the first step in NSW debt recovery, and courts often expect to see one before a claim is filed.
If a company debtor ignores a letter of demand, Vamp Law can issue a statutory demand under the Corporations Act 2001 (Cth), which the company must pay, secure or apply to set aside within 21 days or risk an application to wind it up.
A successful creditor is usually entitled to an order for costs against the debtor, though the amount recovered on assessment is often less than the actual legal fees incurred.
Vamp Law explains likely cost recovery at the outset of a matter, rather than after the fact.
A judgment is only as useful as the debtor's capacity to pay. Vamp Law investigates a debtor's asset position, including property and company searches, before recommending whether to proceed, and can advise on enforcement options such as garnishee orders or examination summonses once judgment is obtained.
You can, if a personal guarantee or a specific legal basis for personal liability exists, such as an unpaid director's guarantee on a lease or trade account. Without one, a debt owed by a company generally stays a debt of the company, not its individual directors or owners.
Vamp Law reviews the underlying contract or guarantee document to establish whether personal liability actually exists before recommending action against an individual.
Ready to recover what you are owed?
If your business is owed money in NSW, make an enquiry or call +61 431 569 686 to discuss your options with Kyra Pastrovic. Read more about insolvency if your debtor may be unable to pay at all.
More on debt recovery
How Do I Recover a Debt in NSW?
Recovering a debt in NSW usually starts with a formal letter of demand, followed by filing a statement of claim in the Local, District or Supreme Court if the debtor does not pay, and then enforcing any judgment through steps such as a garnishee order.
Read moreWhat Is a Letter of Demand, and Do I Need One?
A letter of demand is a formal written request for payment or action sent before legal proceedings begin. It is not always a strict legal requirement in NSW, but courts often expect one, and skipping it can affect your costs position later even if you eventually win.
Read more
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