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Debt Recovery in Victoria

Debt recovery in Victoria, as in other Australian States and Territories, refers to the process of recovering any amount of money that is owed by a person, people or an entity (the ‘debtor’) and which the debtor is legally required to pay back to another person, people or entity (the ‘creditor’).  Often the payment of money will be in return for goods and services of some kind. There are a number of ways of recovering this money using legal avenues.


The first step for a creditor wanting to pursue debt recovery in Victoria will be to send a letter of demand to the debtor. This is a letter asking the debtor to pay back the money within a certain time frame, failing which the creditor will take the matter further to a court or tribunal. If you are a creditor writing a letter of demand, you should be careful not to harass or intimate debtors, as this may be unlawful conduct. If you do not receive an answer to the letter of demand, or if the debtor refuses to pay back the money, you can begin to take steps to recover the debt through the Victorian Courts and/or tribunals.  Which court or tribunal you commence proceedings in will depend on the amount of the debt owing to you.

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The Civil Claims List at VCAT is located in Melbourne and whilst it does not have a general jurisdiction to hear civil law matters (such as general contract disputes) it can hear “consumer and trader dispute(s)” under the Australian Consumer Law and Fair Trading Act 2012. A “consumer and trader dispute” must involve a dispute between a supplier and purchaser (or possible purchaser) of goods and services.  VCAT can also hear specific debt matters out of other legislation (for example retail landlords seeking to recover rent under the Retail Leases Act 2003). Applicants must complete an Application to Civil Claims List form.  It is important to remember that for matters which involve a debt of less than $10,000 parties cannot have legal representation at VCAT hearings. Costs can be awarded under the Australian Consumer Law and Fair Trading Act 2012 but not in all matters. If you are a creditor and are successful in obtaining an order that the debtor repay you, you may apply to the Magistrates’ Court to enforce the order if the debtor does not comply with the order and if the order is for an amount of less than $100,000.

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The Magistrates’ Court has jurisdiction for debt recovery in Victoria to hear any matters involving debts up to $100,000. Unlike some other states and territories, it has no small claims division. To initiate a claim in the Magistrates’ you will need to draft a Form 5A Complaint, which will outline your claim against the debtor. Once you have filed this complaint with the Magistrates’ Court, you need to serve (or deliver) the complaint to the debtor yourself (you can also get a process server or a lawyer to do this instead, if this is impractical or unsafe). Once this has been served, the debtor then has 21 days to either pay the claim or decide to defend the matter, which they can do by filing a Form 8A notice of defence with the Magistrates’ Court. If they do not respond within the 21 day period, you may apply to have a default judgement entered against them.


Once the defendant has filed and served the response, the Court will often organise a pre-hearing conference to try and resolve the matter – or at least some of the issues in dispute – before a hearing is scheduled. They may also transfer the matter to VCAT if the matter would be better handled there and is within VCAT’s jurisdiction. If the pre hearing conference does not resolve the matter, it will then proceed to a hearing at which the matter will be decided by a Magistrate. The Magistrate will decide, on the balance of probabilities, whether the debt is owed or not and may make a number of orders including an order that the defendant repay the plaintiff and pay the plaintiff’s legal costs of the proceedings.

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For debt recovery in Victoria of amounts more than $100,000 you can take the matter to the Supreme Court which has unlimited jurisdiction to hear such matters. However, it is much more costly and time consuming to take a matter to the Supreme Court. It is important to note that under the Limitation of Actions Act 1958 the statute of limitations for taking a debt recovery matter to either the Supreme Court or the Magistrates’ Court is 6 years.

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You may wish to consider mediation as another alternative. For example, the Victorian Small Business Commissioner offers low cost mediation at for $195 per party for matters involving small business. Mediation involves an independent third party (the mediator) assisting parties to resolve the dispute themselves. If the parties come to an agreement, that agreement will also be enforceable as a general contract between the parties.

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Michelle Makela

Michelle Makela is one of our Legal Practice Directors and the National Practice Manager. She holds a Bachelor of Laws, a Bachelor of Science (Psychology) and a Master’s in Criminology. Michelle has had a varied career, working in commercial litigation, criminal law, family law and estate planning. Michelle joined Go To Court Lawyers in 2011. She now supervises a team of over 80 solicitors across Australia.

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