Skip Ribbon Commands
Skip to main content
Sign In

Quick Launch

Text Size
  Print Print this page

Collecting a debt - first steps

Collecting a debt - first steps

This information applies if someone owes you money. These questions and answers are for Western Australia only.

If someone owes you money they have a debt to you. You are a creditor and the person who owes you the money is the debtor.

If your case goes to the Magistrates Court you will be called the claimant. The person you bring a claim against is called the defendant.

Someone owes me money and they won't repay me. What can I do?

You have several options including:

  • Contacting the debtor and trying to reach an agreement through negotiation.
  • Sending a letter demanding payment (called a letter of demand).
  • Going to court - which one depends on how much you are owed.

Taking a case to court should be a last resort. You should get legal advice before going to court.

Do I have to send a letter of demand if I can't reach some other agreement?

Before starting a case in the Magistrates Court you should write a letter of demand to the other party saying there is a debt and that you want them to pay it.

You must write a letter of demand if you want to recover the costs of lodging the claim from the defendant if you end up going to court.

What should I put in a letter of demand?

You should get legal advice before sending your letter of demand.

The letter of demand should:

  • prove the person owing the money (the defendant) knew the debt had to be paid, or provide details of how the debt arose
  • clearly set out the relevant dates, agreements and amounts
  • include copies of quotes or invoices when applicable
  • set a timetable for legal action unless a settlement proposal is received
  • be sent by registered mail and the signed postal receipt kept

This gives the other party a chance to pay the debt without going to court.

You should keep copies of all the letters you send to the other party.

You need to decide if you want your letter to be 'without prejudice'.

What does 'without prejudice' mean?

'Without prejudice' is a statement made when you don't want to affect your legal rights. It means you don't intend to damage your existing rights or claims with what you say in the letter if the dispute needs to be settled in court.

If you write a letter saying 'without prejudice' it cannot be used in court as evidence against you. You can still bring the letter into court but you can't give it to the magistrate as evidence. You can refer to it but only to show that you tried to negotiate a solution.

You may decide to not put 'without prejudice' in your letter if you think you may want to present the letter in court as evidence. If you are not sure what is best for you you should get legal advice.

What if I do not get a response to my letter of demand?

If you do not get a response within the time you set and you want your money you may need to start court proceedings. Taking a case to court should be a last resort.

You should always seek legal advice before going to court.

What if I do not get a favourable response to the letter of demand or they say they will pay and then don't?

If the person still won't pay you and you want your money you may need to start court proceedings. Taking a case to court should be a last resort.

You should always seek legal advice before going to court.

Do I have to accept an offer to pay by instalments?

You don't have to accept an offer to pay by instalments but in some cases it may be the easiest and fastest way to get your money.

You can:

  • Negotiate with the debtor for payment in full.
  • Take the case to court to get payment in full without instalments. Court fees are involved. Also if you get a judgment and then seek enforcement, if the debtor has no capacity to pay in full, the court may decide to let the debt be paid in instalments.

I have been offered a lesser amount to settle the debt now. Should I accept the offer?

Get legal advice on what is best in your situation.

There are a number of factors to consider including:

  • whether you want to go to court
  • whether you will get a better result at court
  • how soon you want your money

Sometimes if the case goes to a hearing at court the magistrate may decide the debtor owes you less than they have offered before court. For example, with a car accident, at a hearing the magistrate may find you contributed to the accident and the damage to your car, for example, by driving too fast, and not award all of your claim. The magistrate could also decide you are owed nothing.

Your case may not get listed for hearing soon and when it is, even if you are successful, the debtor's financial situation may have changed and they may not be able to pay.

Are there time limits for collecting a debt?

Yes. Get legal advice as time limits can vary in different situations.

For more information see also under heading Do time limits apply? on Starting a minor case claim  or Starting a general procedure claim .

What if negotiations have failed and I need to go to court?

Get legal advice before going to court. For more information go to Starting a minor case claim (claims under $10,000) or Starting a general procedure claim (usually for claims over $10,000).

Where can I get more information?

  • Contact Legal Aid WA's InfoLine on 1300 650 579.
  • Go to the Magistrates Court website or a Magistrates Court registry to get more information and forms.

Last reviewed: 29/01/2015

Last modified: 31/03/2015 10:42 AM

Disclaimer

The information displayed on this page is provided for information purposes only and does not constitute legal advice. If you have a legal problem, you should see a lawyer. Legal Aid Western Australia aims to provide information that is accurate, however does not accept responsibility for any errors or omissions in the information provided on this page or incorporated into it by reference.