What To Do If Someone Owes You Money
- RHC Solicitors
- 17 hours ago
- 5 min read
At RHC Solicitors, we understand how frustrating it can be when someone owes you money and refuses, fails or neglects to pay it back. Whether it’s a personal loan, an unpaid invoice or money lent in good faith, recovering a debt can be stressful and time-consuming.
Here’s a practical guide on what steps you can take to recover your money and how legal guidance can assist in the process.
A debtor is an individual, company, or organisation who owes someone money
A creditor is an individual, company, or organisation to whom someone owes money.
In This Article:
1. Start With A Conversation
Before jumping into formal demands or legal action, it’s worth starting with a respectful and honest conversation. Many debts, especially between friends, family members or small businesses, can be resolved without further disputes or demands if communication is open and handled calmly. This approach helps mitigate costs and damage, which can prove advantageous if further legal proceedings are required.
Why Start Here?
People don’t always withhold payment out of malice. Common reasons someone might not have paid include:
Genuine financial hardship
Unintentional oversight or forgotten due dates
Misunderstanding the terms of the agreement
Dispute over the amount or what was provided
By reaching out first, you may be able to clear up any confusion, agree on new terms or confirm a date for repayment without the need of further legal action.
Tips For Effective Communication
It's important to remember that:
even if you’re feeling frustrated, an aggressive approach can cause further dispute
you should outline the amount owed, what it was for, and when it was due
you may find a simple resolution if you both understand each other’s position
Regardless of whether the conversation happens in person, over the phone or via email or message, it’s crucial to keep a record of what was said. Follow up any verbal discussion with a brief written summary to confirm what was agreed.
2. Gather Evidence
When pursuing or defending a claim, gathering clear and relevant evidence is essential to support your position and strengthen your case.
Properly collected evidence can clarify the facts, demonstrate your compliance with legal obligations, and highlight the other party’s conduct or failure to resolve any dispute.
This might include anything that helps to paint a complete and accurate picture of the situation, such as written communications, photographs, contracts, receipts, invoices or witness statements. The quality and organisation of your evidence can significantly influence the outcome, particularly if the matter proceeds to formal dispute resolution or court.
It's important to note that even if there is no written contract in place, oral agreements may still be legally binding. However, they are often more difficult to prove without strong supporting evidence.
3. Send A Formal Letter Of Demand
If informal communication doesn't work, the next step is to issue a letter of demand. A letter of demand is a formal written demanding payment, and is generally prepared by a solicitor.
It must state:
the amount owed
what the debt relates to
the due date for payment
consequences if payment is not made (e.g. legal action)
It’s also important to include a copy of the relevant invoice and/or supporting documents. This ensures the debtor has all the necessary information, and highlights the seriousness of the matter. Providing this documentation is a key part of the process, often expected by the courts if legal action is later required to recover the debt.
4. Consider Mediation Or Negotiation
If a letter of demand proves unsuccessful, mediation or other dispute resolution methods offer viable alternatives. Mediation is generally a more cost-effective and efficient way to resolve disputes without going to court.
A third-party mediator can assist in constructive discussions, helping both parties work toward resolving the dispute. In cases where the debtor disputes the debt or claims an inability to pay in full, negotiation becomes key. This may involve renegotiating the debt to a more feasible amount, such as accepting a reduced sum as a final settlement or establishing a structured payment plan over an agreed period.
Whatever agreement is reached, it is essential to document everything in writing throughout this process. This not only formalises the arrangement but also helps prevent future disputes, offering both parties clarity and security for the future.
5. Take Legal Action
Legal action may be required to recover a debt, and the appropriate jurisdiction will depend on both the amount owed and the nature of the dispute.
The Queensland Civil and Administrative Tribunal (QCAT) for disputes under $25,000
The Magistrates Court for debts up to $150,000
The District for debt from $150,000 to $750,000
Supreme Court for higher value debts
Legal action should be your last resort, as it can be time-consuming and incur costs. However, with the right legal support, it can also lead to a successful outcome.
It's important to note that legal representation is not always required, but it can be beneficial to seek independent legal advice before pursuing civil action. Keep in mind that the other party may be represented by a lawyer.
6. Enforcing A Court Judgment
If the debtor fails to pay after a successful trial outcome, you may begin enforcement proceedings.
Depending on the court, the process and requirements will vary. For example, a QCAT order must be filed with the Magistrates Court, along with an affidavit confirming the amount still owed. Once registered, you can apply for an enforcement warrant within six years of the judgment date or seek the court’s permission if more time has passed.
If the debtor’s financial situation is unclear, you can request an enforcement hearing to obtain that information. With the details in hand, you may apply for a warrant to recover the debt, which may involve seizing property, redirecting funds or garnishing wages, registering a charge over the debtor's assets or issuing a bankruptcy notice (only if the debt is over $10,000).
Noting the complexity of this, it is important that if enforcement is required that you are engaging a reputable and experienced law firm to ensure the correct processes are being followed.
Follow The Steps To Receive Your Money
Being owed money can put you in a difficult position, especially when the debtor is someone you know personally or have worked with professionally. But you don’t have to handle it alone.
At RHC Solicitors, we’re here to help you resolve your debt matter with confidence, efficiency and professionalism. Whether you need help drafting a letter of demand, negotiating a resolution or taking formal legal action, our experienced team will guide you through this process.
Please contact us if you are owed money to discuss your options, and take the next step toward recovering what you’re owed.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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