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Debt & Bankruptcy

How do I recover a debt?

  • The first step to recovering a debt is to issue a letter of demand advising the person or company owing funds (the debtor) that there is outstanding money owed to you and when it should be paid by.
  • If the letter of demand is unsuccessful, the next step is to commence legal proceedings.
  • If the debt is less than six years old and less than $100,000, it will be dealt with by the Local Court.
  • If the debt is over $100,000, it will be dealt with by District Court.
  • To commence proceedings a Statement of Claim must be filed at the appropriate Court and served on the debtor.
  • If the debtor disputes the debt, they must file a Notice of Defence within 28 days of service of the Statement of Claim.
  • If the debtor fails to file a Notice of Defence or apply to repay the debt in installments, an Application for Judgment must be filed.
  • If the debtor defends the debt, the matter will be set down for pre trial review.
  • If settlement does not occur at or at any time before the pre trial review, the Court will set a hearing date.
  • If you obtain a judgment in your favour, enforcement action against the debtor may include  obtaining a writ of execution against the debtor’s property, obtaining a garnishee order against the debtor’s bank account or wages or forcing the debtor into bankruptcy (this will depend on the size of the debt).

Can I send someone bankrupt?

  • In order to make an application to the Court for the bankruptcy of a debtor, an ‘act of bankruptcy’ must be committed by the debtor and established by the person applying to bankrupt them (the creditor).
  • An ‘act of bankruptcy’ is defined by legislation.
  • The most common act of bankruptcy relied upon is that the debtor has failed to comply with a Bankruptcy Notice which requires the debtor to pay the creditor’s outstanding debt within 21 days of being served with the Bankruptcy Notice.
  • As a result, the creditor can apply to the Court for a Creditor’s Petition.  The creditor may have to file Affidavits in support of the Petition and to establish service of certain documents on the debtor which is required by the Court.
  • There may be several hearings in relation to the Petition.
  • Once the Court is satisfied that the correct procedure has been adopted and that the debtor should be declared bankrupt, it will issue a Sequestration Order against the debtor.
  • Sending someone bankrupt can be a complex process and you should obtain legal advice from us if contemplating it.

This post first appeared on Etherington Solicitors: Family Lawyers In Sydney, please read the originial post: here

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Debt & Bankruptcy


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