Debt Recovery Lawyers in Melbourne

Most debts are paid within 14 days of a lawyer’s letter

A properly drafted letter of demand on a law firm’s letterhead, sent to a debtor who has been ignoring your invoices for months, is the cheapest tool in debt recovery and usually the only one you need. In our experience most commercial debts are paid in full within fourteen days of that letter landing. The debtor calls, the cheque clears, the file closes.

When the letter does not work, you have a clear ladder of steps from there to court judgment and enforcement. Which rung you use depends on the size of the debt, whether the debtor is a company or an individual, and whether the debt is genuinely disputed.

If you are owed money in Melbourne or anywhere in Victoria, call MK Law on 1800 130 120 today. The first call is free, and we can tell you on that call whether the debt is recoverable and what the realistic path looks like.

A debt recovery lawyer is not a debt collection agency. An agency can phone and email your debtor; it cannot file a claim, obtain judgment, or seize a single asset. We run the file from the first demand through to enforcement, and a debtor who sees a lawyer on the other side pays faster than one who sees a call centre.

What a debt recovery lawyer does that a collection agency cannot

Plenty of clients come to us after a debt collection agency has spent months getting nowhere. The agency had no real bargaining power beyond persistence. A debt recovery lawyer changes the maths for the debtor: every letter our lawyers send is backed by the genuine ability to commence litigation, take judgment, and enforce it against bank accounts, wages, goods or real property.

We act for businesses chasing unpaid invoices, body corporates chasing levies, landlords chasing arrears, lenders chasing loan agreements, and individuals chasing money owed under a contract. The advice is the same in every case: recover what you are owed at the lowest cost and the lowest risk to your commercial relationships. Sometimes that means a quiet, firmly worded demand that preserves the customer. Sometimes it means moving hard and fast before the debtor’s assets disappear.

It usually starts with one letter

Most files open with a stack of ignored invoices and a debtor who has gone quiet. We read the paperwork on the first call, confirm the debt is owed and within time, and tell you whether a lawyer-drafted letter of demand is likely to do the job on its own. If it is, we can have it on its way to your debtor within 48 hours, with a clear deadline and the real prospect of court action stated plainly. By the end of the call you have a written view and a clear next step, or an honest reason the debt is not worth chasing.

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The debt recovery ladder

Every recoverable debt sits somewhere on this ladder. We start at the lowest rung that has a real chance of working, because every step up costs more time and money.

Letter of demand

A formal written demand stating the amount owed, the basis of the debt, a deadline (usually seven or fourteen days) and the consequence of non-payment. A lawyer-drafted letter of demand carries more weight than an in-house chaser email because the debtor can see legal action is the next step, not a vague threat. We do not use a cookie-cutter template; the letter is built around your contract, the nature of the debt, and what is most likely to make this particular debtor pay.

Statutory demand

For company debtors only, and only where the debt is $4,000 or more and is not genuinely disputed. A statutory demand under section 459E of the Corporations Act 2001 gives the debtor company 21 days to pay, agree terms, or apply to set the demand aside. If they do nothing, the company is presumed insolvent and you can file a winding-up application in the Supreme Court of Victoria or the Federal Court.

Court proceedings

A statement of claim or complaint filed in the appropriate court, served on the debtor, and pushed through to judgment. For undisputed debts the debtor often does not file a defence, and you obtain default judgment in a few weeks. For disputed debts the matter proceeds through pleadings, discovery, mediation and, if it has to, trial. Negotiation and mediation run alongside the litigation the whole way, because a sensible settlement usually beats a hard-won judgment against a debtor with no money.

Judgment and enforcement

Judgment is only the halfway point. Once you have it, you have a range of enforcement options: a warrant of seizure and sale (also called a writ of execution against goods), a garnishee order or attachment of debt and earnings order against the debtor’s bank account or wages, an instalment order, a charging order over real property, an examination summons that compels the debtor to attend court and disclose their assets, and, for substantial debts, bankruptcy proceedings against an individual or a winding-up application against a company.

The 21-day statutory demand window

Statutory demands are powerful, and they are also strictly time-limited. Once a statutory demand is served, the debtor company has exactly 21 days to do one of three things.

It can pay the debt or agree a payment plan acceptable to you. It can apply to the Supreme Court to have the demand set aside, usually on the grounds that the debt is genuinely disputed, the company has an offsetting claim, or there is some defect in the demand itself. Or it can do nothing, in which case the law presumes the company is insolvent and you can move to wind it up.

For directors the consequences of ignoring a statutory demand are serious. Insolvent trading exposes directors to personal liability for debts incurred while the company was insolvent. If you are a creditor, the statutory demand is often the lever that forces a director to engage. If you have been served with one, do not wait. The Corporations Act sets the format and procedure strictly, the 21 days run from service including weekends, and a set-aside application that misses the window cannot be saved.

Which court will your matter be heard in?

The court depends on the amount of the debt and the type of claim.

• The Magistrates’ Court of Victoria hears debt claims up to $100,000. Most commercial debt recoveries settle here. Filing fees are modest, the procedure is straightforward, and default judgment for undisputed debts is quick.
• The County Court of Victoria has unlimited civil jurisdiction, and in practice it is the usual home for claims above $100,000. Procedure is more formal, with pleadings, discovery and mediation built into the timetable.
• The Supreme Court of Victoria hears the largest and most complex claims, winding-up applications, and set-aside applications for statutory demands. The Commercial Court list moves quickly when the matter justifies it.
• The Victorian Civil and Administrative Tribunal (VCAT) handles certain consumer, retail-lease and owners corporation disputes, often at lower cost than a court.
• The Federal Court of Australia has jurisdiction over corporate insolvency, including winding-up applications based on statutory demands, and over claims under federal legislation such as the Australian Consumer Law.

When the file goes to court

If the demand is ignored and the debt is undisputed, court is often faster and cheaper than people expect. We file the complaint or statement of claim in the right court for the amount, serve the debtor, and take default judgment when no defence comes in. Then the real work begins: turning a judgment into money through a warrant of seizure and sale, a garnishee over a bank account, or an examination summons that forces the debtor to disclose where the assets actually are. We tell you before filing what enforcement against this debtor is likely to recover.

Talk to a debt recovery lawyer

Commercial debt recovery versus personal debt

Commercial debt recovery is business-to-business, and the toolkit is broader. Statutory demands are available against company debtors. Costs clauses in commercial contracts often allow full indemnity recovery of legal fees. Personal guarantees from directors give you a second target if the company has no assets.

Personal debt recovery is harder. Statutory demands are not available against individuals; the equivalent is a bankruptcy notice under the Bankruptcy Act 1966, with a 21-day compliance window of its own. Costs recovery is more limited. Judgment-proof debtors (no job, no assets, no real property) are a real risk. We tell you upfront if the cost of recovery is going to exceed the debt, because a judgment you cannot enforce is an expensive piece of paper.

Body corporate and owners corporation debt

Owners corporations rely on quarterly levies to pay insurance, common-property maintenance and managing-agent fees. One non-paying lot owner puts pressure on every other owner in the plan.

Under the Owners Corporations Act 2006 (Vic), unpaid levies are a debt due to the owners corporation that can be recovered with interest and reasonable legal costs. We send the initial recovery letter, file the fee-recovery application at VCAT, where these claims start, obtain the order, and enforce it through the Magistrates’ Court of Victoria if the owner still does not pay. For chronic non-payers, registering a charge over the lot under the Act protects the owners corporation if the lot is later sold. See our page on body corporate debt recovery for how these matters run.

Tax debt and ATO negotiations

The ATO has powers that ordinary creditors do not, including director penalty notices (DPNs) that strip the corporate veil and make directors personally liable for unpaid PAYG, GST and superannuation. If the ATO is threatening DPNs, garnishee notices or winding-up, you need to negotiate a structured payment arrangement quickly rather than let the letters pile up unanswered.

Our tax debt lawyers help with ATO payment plans, remission applications for general interest charge, and defence of director penalty notices where the safe-harbour grounds apply. The earlier you act, the more options remain on the table.

Limitation periods (the six-year clock)

Most simple contract debts in Victoria are subject to a six-year limitation period under the Limitation of Actions Act 1958. The clock starts on the date the debt fell due, not the date of the contract.

If the debtor has acknowledged the debt in writing or made a part-payment, the six years can restart from that date. Past the limitation period, the debt still exists but you can no longer sue on it, which makes early action critical. We see debts written off every year because the creditor waited too long, hoped the debtor would come good, and then discovered the claim was statute-barred.

When the debtor cannot pay: the insolvency crossover

Debt recovery and insolvency are two sides of the same coin. If a company debtor is genuinely insolvent, a statutory demand and winding-up may be the fastest route to either payment or a clean answer that the money is gone. If an individual debtor has no assets, a bankruptcy notice forces the issue but may simply confirm there is nothing to recover.

We act for creditors throughout, working closely with our insolvency lawyers to prove debts in a liquidation or bankruptcy, attend creditors meetings, vote on proposals, and chase voidable transactions where a director has moved assets out of reach before the company failed. Where a debt has escalated into a genuine dispute, our commercial litigation lawyers run the contested proceeding. Because debts so often arise from a breached agreement, our contract lawyers can also pin down exactly what was owed and when it fell due.

What it costs

Cost follows the ladder. A letter of demand sits at the bottom and is the smallest job on it. A statutory demand adds more. Court work then builds stage by stage: pre-filing advice, the statement of claim and filing, default judgment, a defended proceeding, mediation, trial, and finally enforcement. That is the whole reason we do not open at the top.

In commercial debt files, much of the legal cost is recoverable from the debtor. If your contract has an indemnity costs clause, you usually recover the bulk of your fees. Without one, party-party costs orders typically return 60 to 75 per cent of your actual legal spend. Interest under the Penalty Interest Rates Act 1983 (Vic) also runs on judgment debts. The honest test is whether the debt is worth chasing, and we will give you a straight answer on the first call.

Talk to a Melbourne debt recovery lawyer today

If you are owed money and the debtor has gone quiet, every week of delay makes recovery harder. Assets get moved and companies get wound up while the limitation clock keeps running against you.

Call 1800 130 120 or use the form on this page. We can have a lawyer-drafted letter of demand on its way to your debtor within 48 hours. For a step-by-step explanation of what happens next, read our guide to the debt recovery process, or start with the firm overview on our Melbourne civil lawyers hub.