11 Aug 2026Kyra Pastrovic / 4 min read
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.
An unpaid invoice or overdue loan does not usually resolve itself, and the longer it sits, the harder it can become to recover, particularly if the debtor is also struggling to pay other creditors. Vamp Law acts for Sydney businesses and individuals chasing debts that range from a few thousand dollars owed by a slow-paying client to substantial commercial arrears between companies, and the process follows a fairly consistent path regardless of the amount involved.
Step 1: Send a formal letter of demand
A letter of demand sets out what is owed, the basis for the debt, and a clear deadline for payment before proceedings begin. Many debts are paid at this stage, once the debtor understands the creditor is serious and genuinely prepared to escalate rather than sending another informal reminder. A well-drafted demand also strengthens the creditor's position on costs later, if the matter does proceed to court, because it shows the debtor had a fair opportunity to resolve the debt before litigation started.
Step 2: Filing a statement of claim
If the debt is still not paid, the next step is filing a statement of claim in the court that matches the amount owed. In NSW, the Local Court's general division handles claims up to $100,000, with a small claims division for amounts up to $20,000. The District Court hears claims between $100,001 and $1,250,000. The Supreme Court of NSW handles larger commercial debts with no upper limit. Once served, the debtor has a set period to file a defence; if they do not respond at all, the creditor can seek default judgment without a hearing, which is often the fastest possible outcome in an undisputed debt matter.
Step 3: Judgment and enforcement
A judgment in your favour is not the same as being paid, and this is the stage many creditors underestimate. If the debtor still does not pay voluntarily once judgment is entered, enforcement options in NSW include a garnishee order directing a bank or employer to pay funds owed to the debtor directly to the creditor, an examination notice requiring the debtor to attend court and disclose their financial position under oath, and a writ for the seizure and sale of property. Which option makes sense depends heavily on what the debtor actually has, which is why an examination notice is often the sensible first enforcement step against a debtor whose assets are not obvious.
When the debtor disputes the debt
Not every debtor simply ignores a claim. Some file a defence disputing the amount owed, the existence of the contract, or the quality of goods or services supplied. Once a genuine dispute is raised, the matter effectively becomes a civil litigation matter rather than a straightforward debt recovery file, and the timeline and cost involved change accordingly. An early, honest assessment of whether the dispute is genuine or simply a delaying tactic is important at this stage, since it affects how hard it is worth pushing and how quickly.
When the debtor is a company
If the debtor is a company and the debt is not genuinely disputed, a statutory demand under the Corporations Act 2001 (Cth) is often faster than standard court proceedings. The company has 21 days to pay the amount claimed or apply to have the demand set aside; if it does neither, it is presumed insolvent, which opens the door to a winding up application. This overlaps with insolvency law, and Vamp Law regularly advises creditors on when a statutory demand is the right tool for a company debtor and when standard court proceedings are the safer and more appropriate path.
How Vamp Law approaches debt recovery
Kyra Pastrovic sets out a clear fee structure for each stage of recovering a debt, from the initial demand through to enforcement, so a Sydney business or individual can weigh the likely legal cost against the amount actually owed before committing to the next step. Not every debt is worth chasing through every available stage, particularly against a debtor with few realisable assets, and part of the advice at the outset is being honest about that rather than running up costs on a claim that was never going to be recoverable.
Next steps
If you are owed money and the informal reminders have not worked, make an enquiry to discuss recovering it, or read more about Vamp Law's debt recovery practice. This article is general information about the NSW debt recovery process, not legal advice on your specific debt.
Last reviewed 11 Aug 2026. General information only, not legal advice.
