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Recovering a Debt in South Australia

“Where’s my dosh?” – Debt Recovery

Does someone owe you money? Have they failed or refused to satisfy the debt? If so, then legal debt recovery through a solicitor is available to you and should be commenced.

This article will discuss the four-step process involved in recovering that debt in the most efficient and effective manner possible.


In order to pursue debts in a South Australian Court, a court case must be commenced within six years of the date from when the debt was first due. If the debt you seek to recover originates from a period of time greater than six years, sometimes that timeframe can be extended by the Court. We recommend legal advice is sought if this is the case.

In any event, if you seek to pursue debt recovery action you should have proof that the debt exists and of the debt’s value. Copies of invoices, agreements, emails or other documents proving the debt exists should be collated and stored in advance of your consultation with a solicitor.

Step 1 – Letter of Demand

The first step in seeking recovery of your debt is to issue a Letter of Demand (also known as a “Final Notice”) to the debtor.

A Letter of Demand is a formal written notice which demands payment from the debtor in the total amount owed. Typically, a Letter of Demand affords a debtor a timeframe of twenty one (21) days to satisfy the debt prior to any legal action being instituted in Court.

Sending a Letter of Demand is a very important step in the litigation process at it provides the debtor the opportunity to settle the debt prior to lengthy and expensive Court action. The letter can later serve as evidence that the debtor did not reasonably comply with the opportunity to settle the debt.

Depending on the amount of the debt and the potential Court a later action can be started in, there are different requirements for the Letter of Demand, so legal advice should be sought so that you comply with those requirements.

Step 2 – Filing a Claim in Court

If the debtor complies with the Letter of Demand then no further action is required. However, if your debtor does not comply with the demand, then the next step is to file a claim in Court.

In order to do so, you should seek the assistance of a solicitor to draft the necessary Court documents to initiate the Claim. The Claim is the document which puts forward your reasons as to why a debt is owed to you by the debtor.

Typically, a claim for debt recovery is commenced in either the Magistrates Court or the District Court. In determining which jurisdiction to file the Claim, careful consideration by your solicitor is needed as to the rules of each jurisdiction.

Step 3 – Pursuing the Matter in Court

Once the Claim has been filed with the Court, there are four possible directions that your matter could take;

  1. The debtor does not respond in any capacity;
  2. The debtor admits the Claim is valid; and/or
  3. The debtor denies the Claim is valid; or
  4. The debtor files a Counter-Claim.

In the event that the debtor does not respond to your Claim within the time allowed by the relevant Court, you can apply to the Court to have judgment signed in your favour. This will effectively mean that your debt has been proven and that the Court considers it a valid claim against the debtor. You now have a judgment in your favour.

If the debtor admits the Claim is valid, they may make an offer for payment. In this respect, further action in Court may not be required. It is important to ensure you speak with your solicitor to negotiate terms of payment with the debtor and to draft a Deed of Settlement in relation to payment of the debt prior to discontinuing any action in Court.

If the debtor denies the Claim is valid, they have the time allowed by the relevant Court to respond with a Defence. This document must outline why the debtor disputes the existence of any debt and must be filed in Court.

The debtor may, however, not dispute the Claim but instead make a claim that you also owe them money (either for goods or services provided to you, or for a concept known as a “set-off”). In such a scenario, the debtor will file a Counter-Claim. This effectively means the debtor is now pursuing a Claim against you at the same time as you are pursuing them for payment of the debt.

Step 4 – Post Court Processes

If your matter is finalised in Court in your favour, you then have the ability to pursue debt recovery actions.

Those processes, referred to as Enforcement Proceedings, will be addressed in a later article given the multitude of options available to you. Make sure to follow us on Facebook and subscribe to our e-newsletter for the next instalment in the Debt Recovery article series.

If you or someone you know requires assistance in recovering a debt, please contact us on (08) 8210 5400 for a no obligation Free First Interview at one of our 5 easy to reach locations across Adelaide.

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