If you are owed money, the first step is to send a Letter of Demand – a strongly worded letter requesting full or part payment within a certain period of time. Most of the time this demand for payment is sufficient and you will get paid. However …
It is possible that your Letter of Demand will be ignored and the Debtor refuses to pay. In this case you will need to start “playing hard ball” and use the court system to get paid by lodging a Statement of Claim with the court. This starts a formal legal process for recovering the debt you are owed.
Below is a list of some of the most frequently asked questions about Statements of Claim and Letters of Demand. Click on any of the questions to reveal the answer.
What is a Statement of Claim?
- It is normally the first step in the legal claim for a debt owed after a Letter of Demand has failed.
The Statement of Claim must contain a ‘real’ issue supported by evidence to be able to show there is really something in dispute in the matter worthy of the court’s time.
Is there a time limit for my Claim for property damage or debt recovery?
- You must lodge your Claim within 6 years of the damage having occurred or the debt being owed.
How do I start the process of getting money owed to me?
- You normally start by delivering a Letter of Demand to the person or company who owes you money (called a Debtor). If it is ignored and your debt is under a specified amount, depending on the court and State you are in, you can then lodge a Statement of Claim in the Small Claims Division (or other state equivalent) of your local court.
You can do all this yourself without a lawyer and some courts (e.g. Tasmania) do not allow you to be represented by a lawyer.
What happens after I lodge the Statement of Claim?
- You must serve a court stamped copy of the Statement of Claim on the debtor within 6 months of the date you filed it in the court. The Statement of Claim must be served according to the court rules.
You can also ask the court to serve the Statement of Claim on a debtor by post for a fee. Only the court is permitted to serve on individuals by post. If the debtor is a company or registered business, you can post the claim yourself. You can also engage a private process server to serve your Statement of Claim but this would be more expensive.
How do I serve a Statement of Claim?
- Serving means you are notifying the debtor that you are making a claim and gives them an opportunity to defend the claim or pay what is owed to you.
When serving a Statement of Claim on an individual you can:
- Hand it to the debtor
- Leave it in the presence of the debtor and explain what it is
- Leave it with a person over the age of 16 at the debtors place of business, work or home
- Ask the local court to post it to the debtor for a fee
When serving a Statement of Claim on a company or business you can:
- Hand it to a Director of the company
- Leave it with a person over the age of 16 who appears to work for the business
- Post it to the registered office of the company or address where the business operates
Who can serve my Statement of Claim?
- You can either serve the Statement of Claim yourself or have someone else do it for you. You can also ask a private process server to serve your Statement of Claim for a fee.
Process servers can be found in the Yellow Pages telephone directory. If you want to serve your Statement of Claim by mail, you can do this if it is a corporation or business but only the local court can mail a Statement of Claim to an individual.
Be aware that there is a risk that if you serve the Statement of Claim by post or leave it with someone who is not the debtor, it may not be received. The debtor can then have the court decision set aside because they did not receive a copy of the Statement of Claim.
How can my debt be settled after my Statement of Claim is filed with the court?
- You can try to settle the case at any time after filing your Statement of Claim with the court through mediation or negotiation. You need to ensure that if you settle the matter, that you put the agreement in writing.
If the matter is decided in court, the court will award what is called a default judgment.
How long do I have to serve my Statement of Claim after it is filed in court?
- Your Statement of Claim is valid for 6 months after the date it is filed in the court. You have 6 months from that date to serve it on the debtor.
What if the Debtor refuses or avoids personal service?
- If the debtor refuses to answer the door, gate or office when someone is trying to serve court documents, this is called ‘keeping house’. The court rules say that if this is the case, the person serving the Statement of Claim can leave it in the post box, under the door, or pin it to a fence, wall or door.
You then need to post a letter to the debtor within 24 hrs to tell them where the Statement of Claim was left and where to find it.
The person who tried to serve the Statement of Claim will need to fill out an Affidavit of Service to describe how the debtor is ‘keeping house’, where the Statement of Claim was left and details of the letter posted to advise the Debtor of the service.