Whether you are a sole trader or a company trading in the ACT, it is important that you familiarise yourself with the processes to enforce a payment. It is more likely than not that your business will encounter a customer who will not pay an invoice. What steps can you then take to recover the money owed to you?

Letters of Demand

If you are seeking to enforce payment, you may want to consider resolving the matter through first and second reminder letters, which may assist in preserving your business relationship. If, however, these prove unsuccessful you will then likely issue the debtor with a Letter of Demand. A Letter of Demand sets out:

  • The amount owned,
  • Any interest payable and the interest rate,
  • The period in which parties can settle the matter, and
  • The consequences for the debtor if they do not meet the demand.

A litigation lawyer can assist with drafting a Letter of Demand that employs a neutral tone. It is illegal to issue a Letter of Demand seeking to harass or intimidate the debtor.

Debt Recovery

All Australian states and territories provide for a quick and efficient recovery of debts through the small claims division in their local courts. In the Australian Capital Territory, a small claim is one that is for:

  • $10,000 or less, and
  • Relates to a debt arising in the State or attaching to a debtor who ordinarily resides in the state.

The ACT Civil and Administrative Tribunal (ACAT) also deals with small claims and provides parties with a quicker and cheaper alternative to Court.

Superior courts, namely the Magistrates and Supreme Court, deal with claims exceeding $10,000. The Magistrates Court hears claims for up to $250,000 while the Supreme Court hears claims over $250,000.

When determining whether or not to commence legal proceedings, you should consider:

  • Can you recover the debt? If the debtor is bankrupt, insolvent or has a number of other creditors who are also seeking payment, pursuing legal action may be a futile exercise.
  • Are you legally entitled to the debt? If you are unsuccessful in establishing that you have a right to enforce payment, you may have costs awarded against you.
  • Have you brought the claim in time? A debt recovery action must usually be commenced within six (6) years of the debt arising.

How to Enforce a Payment

If the Courts or ACAT make a judgment in your favour and the debtor does not pay you, there are still some avenues available to you to recover the debt owed.

In particular, you can:

  • Apply to the courts who may order the Sheriff to seize and sell the debtor’s property,
  • Apply for a garnishee order that attaches to the wages or earnings of the debtor, or
  • You may even wish to institute bankruptcy proceedings against the debtor.

Commonly, liquidation and/or bankruptcy provides the most effective way to enforce a debt.


If you would like to know more about how you can enforce a payment in the ACT, get in touch with us at LegalVision. One of our experienced litigation and dispute resolution lawyers would be delighted to answer any of your questions and assist you.

Vanja Simic
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