Legal Small Claims Recoveries in Victoria, Australia: How Does it Work?

Legal Small Claims Recoveries in Victoria, Australia: How Does it Work?

Hi, my name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia.

If the usual debt collection efforts have failed, the next step can be legal action. Here at Debt Recoveries Australia, we will only recommend legal action if the amount owing is above $5,000.00 and we know the debtor or company have assets to satisfy the debt. There are a few other factors to consider, but these are the two bases we work from. Once we are satisfied that the criteria for legal action are met, we refer the matter to our legal team at ADC Legal Litigation Lawyers.

We are often asked, what is the legal process? How does it start?

Firstly, small claims are actions that are brought in court against an individual, a partnership, or even a company or corporation. These actions can be brought to successfully recover small sums of money that are owed to you or your company.

This article explains the process of small claims debt recoveries in Victoria, Australia.

1. Determine if your claim is legally enforceable.

In order to collect money through small claims debt recovery, the debt itself must be legally enforceable. Additionally, the debts cannot be controlled by the National Credit Code or the National Consumer Protection Act of 2009.

2. Write a demand letter.

The first step in bringing a small claims case is to write a demand letter. This can be done before you file anything with the court. In your letter, make a demand for the money you are owed, but be careful not to harass the person who owes you money.

Additionally, be sure not to make your demand letter look like it is coming directly from the court. It is important to be honest and transparent, not misleading or deceptive.

3. Negotiate.

Here at Debt Recoveries Australia, our first priority is to collect the money without having to resort to legal action. Therefore, when the debtor replies to your letter, always try to negotiate to get payment before you start legal action.

If the debtor pays the money owed, then congratulations! You have no further need for small claims recovery. If, however, the debtor does not immediately pay, you can try to set up a payment plan with the debtor. If the debtor does not pay the debt and you are unable to create a successful payment plan, you might consider writing the debt off. Writing off the debt entitles you to a tax deduction, which makes this a good option for very small debts.

4. Heading to the Small Claims Tribunal.

If you are unable to reach a positive determination of the debt owed to you, you can bring an action in the local small claims tribunal to recover the money through legal means. Here in Victoria, these claims can be brought either through your Magistrates’ Court or through the Victorian Civil and Administrative Tribunal (VCAT).

5. Deciding between the Magistrates’ Court and VCAT.

Each venue serves a different purpose. Claims that are under $100,000 and are not more than six years old may be brought before the Magistrates’ Court. Magistrates’ Court may be the best option for those people attempting to recover small debts outside of the Melbourne metropolitan area, or for people who are not contained in the VCAT categories.

VCAT is used when debts fall under the Australian Consumer Law and Fair Trading Act of 2012 or ACLFTA. Usually, the debts involve goods or services. Filing under the ACLFTA allows for many potential remedies, however, there are restrictions on ACLFTA claims, including filing fees, no-cost shifting, and no available remedy for disputes that arose before 1 September 1999.

6. Recovery.

Whether you recover your money at the demand letter stage, or choose to initiate claims either through Magistrates’ Court or VCAT you will likely be able to recover the money owed to you. If the Magistrate orders that the debtor pay you, that order is legally enforceable.

Similarly, the VCAT Tribunal Member is empowered to make legally enforceable determinations of responsibility. If either the Magistrates’ Court or the VCAT enter an order in your favour, the debtor is legally obligated to repay the debt. In some cases, they will be ordered to pay interest and some of your legal costs as well.

 

Trying to collect on a debt is always stressful, but knowing that Victoria has mechanisms in place to help creditors recover debts owed can help eliminate some of that stress.

In addition to bringing an action in small claims, you may also consider outsourcing to a professional debt collector such as Debt Recoveries Australia to professionally manage and collect on overdue debts.

If you have more questions on legal small claims recoveries in Victoria, need, contact us at at Debt Recoveries Australia on 1300 799 511. You may also email me at email@debtrecoveries.com.au or Skype at debtrecoveries.

25 Comments on “Legal Small Claims Recoveries in Victoria, Australia: How Does it Work?

  1. What if I don’t have my employers adress…..i have his phone number and email adress, business name and abn……how do I go about sending a demand letter or finding his adress

    • Hi Kylie. My first question would be why have you left it for 6 years? Secondly, the statute of limitations for debts here in Australia is usually 6 years. The statute of limitations is the law that sets the time limit based on a specific starting period in which legal action to collect debt is permissible.

      In other words, creditors can only take legal proceedings to recover debt if they meet requirements within the time period set by the statute of limitations in the applicable state or territory.

      The limitation periods are usually 6 years. Court judgment usually lasts 12 years
      Northern Territory- limitation period is 3 years. Court judgment: 12 years

      • Hi Adam, thanks for replying.
        The original circumstances in which the loan was given have only just recently been found as incorrect. The loan started 20yrs ago and went for 10 yrs.

  2. Hi there, I’m considering making a claim through the court, but just wondering how do i serve my employer the papers if he lives outside the country (in this case New Zealand). Employment took place in Australia, Melbourne. But he’s since moved to New Zealand. And i know that the required methods of serving are very specific.

    • Hi Serena.

      The Trans-Tasman Proceedings Regulation 2012 (https://www.legislation.gov.au/Details/F2017C00129) now allows us to commence legal proceedings against individuals/entities living in New Zealand without having to seek leave from the Court. We only need to comply the prescribed method of service as per the Court/Tribunal rule.

      In this instance, if the employer is an individual, then the individual must be served in person. If the employer is a company, then service can be effected via post to the registered address for service of the company.

      This website may be able to assist in finding the NZ Business number – https://www.nzbn.govt.nz/?gclid=EAIaIQobChMIpbTOgtf91gIVQiRoCh0eYg0KEAAYASAAEgLi0vD_BwE.

      If the matter is in the Magistrates Court of VIC, I believe that the Claim must be in Form 7A.

      Form 1 must also be served together with all the relevant documents. I don’t have a template of the Form for service to NZ.

      Depending on the type of claim, there may be other documents required to be served, for example, in motor vehicle claims, we are required to also serve the assessment report and invoices.T

      The contents of Form 1 can be found in the Trans-Tasman Regulation online, and the contents of the Claim form can be found in the Magistrates’ Court General Civil Procedure Rules 2010 http://www6.austlii.edu.au/cgi-bin/viewdb/au/legis/vic/consol_reg/mcgcpr2010464/.

      I recommend contacting the Court to confirm what forms are needed, and to obtain a template.

      Once served, an affidavit of service must be sworn by the server and the plaintiff must keep the original for filing.

      The debtor has 30 days to respond to the claim.

      I hope this helps.

  3. Hi There
    What if I have lent someone money $7,650 and he has promised through text messages to pay back every cent. And then I find out that he will re-neg on his promise, and I have asked for the money to be paid back via text, and there has been no response.

    Thank You

    • Hi Rachael. These matters are best handled by a debt collection agent or you can litigate. Hope this helps.

  4. Hi,
    My husband is a former employee and former owner of this company. This company owed him his distributions (under $10,000). we had sent request of payment and will be sending Letter of Demand soon. Which court should we lodge of legal matter; VCAT or Magistrate court (small claim)? we are in Victoria. Thank you in advance.

  5. Hi,
    I lent my daughters sister in law $2000 to buy a car a couple of years ago. It was a verbal agreement with witnesses and there is a record of the bank transfer with loan as the description.
    She has paid one instalment of approximately 200 dollars but despite repeated assurances initially and now rejecting my calls, nothing.
    If I were to initiate legal action and there were administrative court costs involved, would they be added to her debt assuming I was successful?
    Additionally if an order to seize property was awarded, would that involve me turning up with a Ute and paid up life insurance or would the sheriff enforce it.
    I have considered other actions like dobbing her in to centrelink etc but I don’t want to disadvantage her children, I don’t want revenge, just my money back (and my self respect).
    Thanks.

    • Hi Alice, did you figure out what to do with a verbal agreement? I am in a similar situation.

      • Hi Ximin. You have very little chance of getting your money back without an agreement. See the home page of http://www.debtrecoveries.com.au website for some free templates so you can have an agreement in place. All you can really do, without an agreement, is keep up friendly, continuous pressure on your debtor to pay, without harassing them.

      • You have very little chance of getting your money back without an agreement. See the home page of http://www.debtrecoveries.com.au website for some free templates so you can have an agreement in place. All you can really do, without an agreement, is keep up friendly, continuous pressure on your debtor to pay, without harassing them.

  6. Hi,
    I’ve lent someone money over 5 months which has added to a total of $7,970. I have yet to recieve any of it back. They said they would have the money for me and I never recieve anything.
    What should I do now?

    • Hi Lisa. You should have secured the debt with collateral, or at least a contract. My advice is not to lend anymore money to anyone, without getting a signed contract first, along with a guarantee.

  7. Some has hit into my car while it was parked i know who it was i went to get quotes and told him about it and now hes saying he cant pay up kos he has no money ?

    • Hi Elaine. Yes, very common. We deal with this every day. 4 Things. Be assertive, friendly and persistent. Most importantly, DO NOT give up. He/She will get tired of you eventually and pay up. Simple.

  8. I lent my son and his girlfriend $10,000 to start an on- line business. She put the business in her name, spent the money on goods to sell…tripling the money..broke up with my son and now says she owns all the business and has not given back our money. Have we lost everything?

    • If you do not have a written contract, then yes, you have. We cannot help without a contract. Best you can do is your own collections and see how you go. I feel for you . Good luck!

  9. I lent two instalments of $20K (total $40K) to a friend in order to assist him in preparing his house for sale.

    the agreement covered: interest rate payable on the loans (20% pa pro rata); and repayment term (payable upon his receipt of funds from the settlement of the house sale).

    the house has sold in July this year, and I believe it was on 60 days terms for settlement.

    I haven’t heard from him since late July.

    There is an email trail of agreements between us indicating the nature of our agreement, however there is no signed paperwork.

    I am in Germany until early next year, and am concerned my friend may be intending to permanently leave Australia before I return.

    I have the following personal information from him: passport number; phone number; email address; last known address; contact details of some of his friends and our mutual friends; contact details of the real estate agent responsible for handling his house sale.

    What is the best way for me to move on this? I am motivated to take the matter to the Magistrates Court as soon as possible, but am worried about my ability to serve the notice to my friend in person.

    regards

    • Thanks Richard. I would recommend our “no win-no fee” debt collection for this matter. I have emailed you privately. Legal proceedings may be costly if your debtor has already left Australia. Thanks , Adam.

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