Time Limit
You have six years to start a court case to recover a debt from when:
- the money became owed
- the last repayment was made, or
- the debt was last acknowledged in writing,
whichever comes last.
Debts are a very common legal problem that most people experience at some stage in their life. This topic explains what you can do if you are owed money.
If someone owes you money, you can make a claim asking them to repay the money to you, or sending a letter of demand. Before you start a claim against them, you’ll need to find out the correct address, name, or legal entity of the other party.
If you can't resolve your dispute, you may end up in court. However, it is a good idea to try to avoid going to court by settling your dispute, if possible. For more information, see Resolving your dispute.
If you are owed money, you will need to decide whether to start a case. Which court you can go to will depend on the amount of your debt.
If you wish to make a claim against a person, business or a company, you’ll need to find out the correct address, name, or legal entity of the other party. You also need to make sure you are naming the right person or business and you have their correct address.
If you do not have the correct contact details for the other party you won't be able to clearly communicate your claim to them. If you end up going to court, you may not be able to serve (give) court documents on the other party and this will cost you money and time.
If you have not been in contact with them for a while, you will need to find out if the address you have for them is current.
You need to work out whether you are claiming against an individual person or a business.
If the other party is a business you will need to know what sort of business it is: a company, sole trader or partnership. The other party could also be a co-operative or an incorporated association or a government department.
You can find out the name of the other party by looking at any documents you have from them, for example, receipts, invoices, letters and emails.
If you want to make a claim against a business or trader for goods or services, consumer laws may apply. For more information about consumer rights and to lodge a complaint, go to the NSW Fair Trading website or get legal advice.
If you want to make a claim in court, it is very important that start your case against the right person or business and that you use the correct name for them. If you don't name the correct person or business as the defendant, and the claim has to be amended or withdrawn, you may be ordered to pay their legal costs. Also, court fees will not be refunded.
For more information, see Identify the party that owes you money.
A letter of demand is a letter to the other party, asking them to pay you the money they owe.
It warns the other party that if this is not done you may start a court case to recover the money they owe you.
The letter should say how much is owed and why, when the money should have been repaid, and what will happen if they don’t pay you back.
It is important to clearly tell the other party that you believe they owe you money, and how much. They may have forgotten or not realised that they owed you money, or there could be some other misunderstanding.
By sending a simple letter setting out your claim, you might convince them to pay the money and therefore avoid the need to start a case in court. This will save you time and money. If you end up having to go to court, the letter is evidence of you asking for your money back.
If there is an Apprehended Violence Order (AVO) against you, protecting the other party or anyone they have a domestic relationship with, you should get legal advice before sending a letter of demand. Sending a letter of demand may be a breach of the AVO.
For more information, see Letter of demand.
If you are owed money, you should carefully consider whether it is worth starting a court case. Which court you can go to will depend on the amount of your debt.
Before going to court, you should try contacting the other party to resolve the dispute. You can phone them, send them an email or sms, or write them a letter. Whichever method you choose, it is important to make sure you communicate clearly, setting out how much you are claiming and why you believe they owe you the money. For more information, see Resolving your dispute.
The time limit to start a court case to recover a debt is six years from when the money became owed, when the last repayment was made, or when the debt was last acknowledged in writing (whichever comes last). If you are unsure, you should get legal advice. For information about starting a court case, see Going to court.
Which court you apply to will depend on how much money you are claiming. You can start a court case to recover a debt in:
- the Small Claims Division of the Local Court if the claim is for up to $20,000
- the General Division of the Local Court if the claim is for more than $20,000 and up to $100,000 (or $120,000 in some limited circumstances)
- the District Court or the Supreme Court if the claim is for more than $100,000 (or $120,000 in some limited circumstances), or
- the Supreme Court where the claim is for possession under a mortgage.
For information about going to court to recover a debt of $20,000 or less, see Going to court.
If the claim is for more than $20,000 it is dealt with by the Local Court General Division. You should get legal advice if the amount of debt claimed is more than $20,000. For more information, see Local Court - General Division.
You have six years to start a court case to recover a debt from when:
- the money became owed
- the last repayment was made, or
- the debt was last acknowledged in writing,
whichever comes last. If you are unsure, you should get legal advice.
A judgment from a court can help you get your money back, but going to court will cost you time and money.
Before you start a court case, here are some things to think about when you are deciding if it is worth it.
Can you find the other party?
To make a claim in the Local Court you have to serve a copy of the court documents on the other party and the court must have an address so that it can send letters and documents to them. You cannot start a case unless you can find out the correct address for the other party. If you don't serve documents on the correct address you may have trouble running a case against them.
Are you within the time limit for starting a court case?
The time limit to start a court case to recover a debt is six years from when the money became owed, when the last repayment was made, or when the debt was last acknowledged in writing (whichever comes last). If you are unsure, you should get legal advice.
Does the debt have a connection with NSW?
To start a case in a NSW court, your claim must have some connection with NSW. For example:
- the loan was made in NSW
- the goods and/or services were supplied in NSW
- you or the other party live or have a business in NSW.
If you are not sure whether you can file your claim in NSW, you should get legal advice.
Do you have evidence to prove your claim?
To win a court case, you need to have evidence to support your claim. Evidence to support a claim could include:
- copies of contracts, receipts, bank statements, invoices, emails or letters that support what you say happened
- witnesses who can make a statement.
You should consider the strength of your claim before going to court, and get legal advice.
Do you need a lawyer?
You can have a lawyer if you want one, but you may not need one. The Small Claims Division of the Local Court was set up to help people run their case without a lawyer. You will usually have to pay for a lawyer if you use one, and even if you win you will probably not get all your legal costs back.
Do you have time to go to court?
Going to court can take up a lot of your time. If the other party disputes your claim, you will usually need to go to court twice and possibly more often. You may also have to spend time doing research, serving court papers, gathering evidence, and writing statements.
Can you afford it?
If you decide to start a case in the Local Court, you will have to pay filing and service fees.
You may also need to pay:
- costs of enforcing judgment, if you win
- professional (lawyer's) costs, if you lose.
You can claim some of these costs from the other party. But even if you win, there is no guarantee that you will get all your money or your costs back.
Will you get your money back if you win?
Getting your money back depends on whether the other party has any savings, income or property that can be used to pay the debt.
Even if you win your case, unless the other party actually has money or assets that can be used to pay the debt, you may never get your money back.
If you’ve tried to resolve your matter without going to court, and the other party still won't pay you, you may need to start a court case. The first step is to complete a Statement of Claim form and file it in the Local Court.
If the claim is for a debt of less than $20,000, this claim is dealt with in the Local Court - Small Claims Division. For information on the steps for staring a case see Going to court.
If the claim is for more than $20,000 it is dealt with by the Local Court General Division. For more information see Local Court - General Division.
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