You are owed money and have been unsuccessful in having it paid despite numerous call, emails and letters. What do you do now?

Letter of demand

The first step is to have a solicitor write a letter of demand. A letter of demand is a letter to the debtor stating that you are owed a debt of a certain amount and requiring its payment within 7 days.  It states that if payment is not made within that time you will commence proceedings to recover the debt without further notice to the debtor.  Sometimes such a letter from a lawyer has the intended consequences and the debt is paid, however, often it is not.

Commencing proceedings

If a debtor does not repay the debt after a letter of demand has been issued, the next step is to commence proceedings in the appropriate court. Which court will depend on the amount owed to you.  If, generally, the debt is:

  • up to $10,000 the proceedings are commenced in the small claims division of the local court;
  • more than $10,000 and up to $100,000, the proceedings are commenced in the general division of the local court;
  • more than $100,000 the proceedings are commenced in the District Court.

The Supreme Court proceedings will either be defended or not. If the proceedings are defended you are likely to incur significant legal costs.  You may be able to obtain an order to recover those costs.

Default judgment and enforcement of the judgment debt

If the debtor does not file a defence or pay the debt, you can apply for default judgment 28 days after the Statement of Claim was served.

Once you have a default judgment you must take steps to force the debtor to pay. This is called enforcing a judgment.  You have 12 years from the date of the judgment to enforce it.

You must first consider whether the debtor (now called the judgment debtor) has money to pay the judgment. If the judgment debtor has no money you may be wasting your time trying to enforce the judgment.

Enforcement can be done in the following ways:

Examination order

If you are not sure what assets or income the judgment debtor has, you can get an order from the court that the judgment debtor provide you with information about their finances. This can help you decide what the next enforcement procedure will be.

Writ for the levy of property

This is when the court orders the sale of the judgment debtor’s property by the sheriff to satisfy the debt. In some cases this is enough for the judgment debtor to enter into an agreement to pay the debt, such as by agreeing to an installment order.

Garnishee order

This is an order from the court that money can be taken from the judgment debtor’s wages or bank account.


If the judgment debt is more than $5000, you can apply to the court for an order to bankrupt the judgment debtor.

Winding up a company

If the judgment debtor is a company, you can apply to wind up the company. This is first done by issuing a statutory demand.  If the judgment debtor does not comply with the statutory demand within 21 days it is considered to be evidence that the company is insolvent and you can then takes steps to wind up the company.

Both winding up and bankruptcy procedures involve significant time and cost and should be carefully considered with a lawyer before undertaking.

This article is for general information only and not legal advice. Legal advice should be obtained before taking  any action or otherwise rely upon the content of this article in any way. This article was prepared on 28 March 2017 and has not been revised to account for any changes in the law since that time.