11 Jan The Legal Procedure for Debt Collection in Queensland
Australia enforces strict debt collection regulations. There are limits to how, when and why you can contact a debtor, which can make it difficult to recover your money.
If you’re dealing with a debtor who can’t or won’t repay their debt, you may be left with no choice but to explore your legal options. The legal procedure for debt collection in Queensland is relatively straightforward, but it can be time-consuming.
In this article, we discuss recovering debts through QCAT and Queensland’s legal system, and figure out which option is right for you.
Working with a Debt Collector
The best way to recover an outstanding debt is by working with a debt collector.
Your debt collection agency can help you resolve the matter privately. This is often the most time and cost-effective way to recover debt.
On your behalf, a debt collector is authorised to contact the debtor and negotiate an agreement. This may involve reducing the total amount of the debt and/or establishing a payment plan that suits their financial situation.
Debt Collection Laws in QLD
Queensland has strict regulations surrounding debt collection and dealing with debtors. There are a limited number of legal actions you can take to recover a debt.
We generally recommend speaking to a professional debt collector before taking any action yourself. If you run afoul of Queensland’s debt collection laws, your debtor can take you to court to request compensation, and you may face criminal charges.
Professional debt collectors can take a range of actions if a debtor won’t pay their debt. A debt collector may:
Working with a debt collector ensures your debt is collected legally and ethically, and minimises the risk of the debtor raising a complaint about your actions.
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Commencing Legal Proceedings for Debt Collection
In some cases, your collections agency may recommend taking legal action against a debtor. This should be considered a last resort.
Legal proceedings are time-consuming and they can be costly. They are also subject to strict time limits and evidentiary requirements, so achieving your desired outcome can be a challenge.
The legal route you take depends on the value of the outstanding debt:
Outstanding Debt Amount | Court System |
|---|---|
For amounts up to $25,000 | |
For amounts up to $150,000 | |
For amounts $150,000 to $750,000 | |
For amounts over $750,000 |
QCAT Debt Recovery
The Queensland Civil and Administrative Tribunal (QCAT) resolves minor debt disputes involving amounts up to $25,000.
QCAT debt recovery begins when you file an application with the tribunal. Your claim is served on your debtor, and they are given 28 days to dispute the claim or pay their debt:
The advantage of using QCAT is that the tribunal charges fixed fees for dealing with your matter. These fees are cost-effective when recovering small debts without using a solicitor.
The only thing to keep in mind is that QCAT matters are subject to strict time limits. If you wait too long to lodge your application, or if you fail to follow QCAT’s filing and evidence procedures, your claim may be dismissed.
It’s best to work with a professional debt collection agency if you want to pursue your matter through QCAT. This is more affordable than working with a solicitor and it ensures you won’t miss any important deadlines.
Debt Recovery Through Other Courts
If you’re owed more than $25,000, you need court intervention to recover your money. Depending on the amount of money you’re owed, you’ll need to apply to either the Magistrates Court, District Court or Supreme Court of Queensland.
The legal procedure for dealing with the court is similar to QCAT:
- 1You (the creditor) files a statement of claim with the relevant court.
- 2Your claim is served on the debtor, who is given time to respond to the claim or pay the debt.
- 3If the debtor disputes the claim, they can file a defence with the court.
- 4You will need to respond to the defence or request a court hearing.
It’s common for the courts to refer your matter to mediation before proceeding to a hearing. You’ll receive a hearing if you can’t reach a resolution with your debtor.
You should always retain legal representation when dealing with the court system. Speak to your debt collection agency about their legal support services for debt collection before applying to court.
How Money is Recovered Through the Courts
If QCAT makes a Decision, or another Court makes a judgement in your favour, the debtor is legally obligated to repay their debt. If the debtor still won’t pay their debt, the court may need to enforce its ruling.
QCAT and Queensland Courts can issue several types of enforcement warrants, including:
Enforcement warrants are a serious matter.
Enforcement Hearings
If you are still struggling to recover a debt, you can apply to the court for an Enforcement Hearing. An Enforcement Hearing requires the debtor to confirm the following:
- 1Their financial situation
- 2Any assets that may be able to be seized
- 3Other documents you need to enforce your order
This compels the debtor to reveal their financial situation and allows you to make a plan for recovering the debt.
For example, a debtor may be unwilling to pay their debt. They also won’t provide any information to your debt collection agency, so you are unsure whether the debtor has the means to repay you.
You request an enforcement hearing to uncover their financial situation. At the hearing, the debtor reveals a healthy income and several assets that could be used to repay the debt.
Both the debtor and creditor are required to attend enforcement hearings. If the debtor doesn’t attend, the court may issue an enforcement hearing warrant for their arrest.
Garnishee Orders in QLD
Garnishee orders (also called a warrant for the redirection of earnings) are a common way to recover a debt through QCAT or the court system.
If QCAT or the Court grants a garnishee order, it allows a third party (e.g. the debtor’s employer) to send part of the debtor’s earnings directly to you.
The benefit is this allows you to recover your debt from third parties, instead of relying on the debtor to make payments voluntarily.
The court will only issue a garnishee order if:
A garnishee order may cause “unreasonable hardship” if the redirection of earnings causes the debtor to be unable to afford food, accommodation, clothes, education and medical expenses.
How to Apply for a Garnishee Order in QLD
You must apply to QCAT or the relevant Queensland court to obtain a warrant for the redirection of earnings. You need to:
- 1Ask the registrar to hold an enforcement hearing. Information collected at the enforcement hearing will determine whether the court grants the garnishee order.
- 2File the correct forms with QCAT or the court, including a statement of support that provides the details of the debt.
- 3Serve the warrant on the debtor and their employer.
- 4Serve the employer with the correct forms.
The garnishee order comes into force 7 days after the employer is served. If the employer refuses to pay, you can file an application for contempt with the court. Contempt of court carries monetary fines and prison terms.
Speak to your debt collector or solicitor for help with obtaining and filling out the correct forms.
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