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.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy