The Stonegate Legal FAQ page will attempt to answer all of your commercial litigation, debt dispute, and insolvency frequently asked questions (“FAQ“).
Statutory demand FAQ, bankruptcy FAQ, debt dispute FAQ.
Let us answer your frequently asked questions below.
Debt Recovery FAQ
What is legal debt recovery?
Legal debt recovery is the act of recovering unpaid debts from debtors using the Courts or the Queensland Civil and Administrative Tribunal (“QCAT“). Usually commenced by claim and statement of claim, the aim is to get an enforceable judgment or money order.
What is the minimum amount of debt?
There is no minimum amount of debt that you can recover, however if the cost of recovering the debt is more than the debt amount, then it may not be worth trying to recover. QCAT can recover debts up to $25,000.00 and the Magistrates Court up to $150,000.00.
What are the fees in the Magistrates Court?
The fees in the Magistrates Court are governed by the Uniform Civil Procedure (Fees) Regulation 2009 (QLD). They will likely change every year, so you can look on the Magistrates Court website itself to see the current fees for civil debt recovery action.
Is there a limitation date on a debt to be recovered?
Yes. Section 10 of the Limitation of Actions Act 1974 (QLD) says that:
The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose … an action founded on simple contract or quasi-contract
This means that an action in debt recovery, being an action for a breach of contract cannot be brought after six (6) years from when the cause of action arose.
The date of the cause of action can be extended by acknowledgement of debt and/or part payment subject to section 35(3) of the Limitation of Actions Act 1974 (QLD). We strongly advise getting legal advice.
How long can old debts be collected?
As mentioned above, a creditor has six (6) years from the last time the debtor acknowledges the debt in writing, or makes a payment toward the debt, until that old debt can be collected.
TIP – If you are reaching the end of a six (6) year limitation period, try to get the debtor to make a small payment, or a written acknowledgement that the debt remains due and payable, and the limitation period starts over again.
Read How Long can a Debt be Chased in Australia?
How much does debt recovery cost?
It really depends on how far the debtor makes a creditor take the matter. We have successfully recovered debts with a letter of demand. We have also had to wind up a debtor company or bankrupt a person in order to enforce a final judgment or final order of the Court.
If you want to have a confidential chat about fees and costs call us on 1300 545 133
Can you go to Court for a debt?
Yes. If a debt cannot be recovered by using dispute resolution methods, then a creditor may be left with no choice but to commence proceedings in the Court with jurisdiction.
The Magistrates Court has jurisdiction to hear debts up to $150,000.00. The District Court has jurisdiction to hear debts up to $750,000.00. The Supreme Court has jurisdiction to hear debts over $750,000.00.
Can you go to jail for a debt?
No, not usually. The Bankruptcy Act 1966 (CTH) has provisions where breach could allow for a jail term. There are also provisions in the Corporations Act 2001 (CTH) where serious breach of a director’s duties can result in jail time if successfully prosecuted. Also, if the debt arose under circumstances such as theft or fraud, then the debtor could go to jail if successfully prosecuted.
However, an unpaid debt will not usually result in a jail sentence on its own.
Can they take your house for a debt?
Yes. If a creditor gets a judgment against a debtor, then the creditor can apply for a warrant for seizure and sale of the debtor’s real property.
Alternatively, a debtor may choose to enforce the final judgment with bankruptcy, where if the debtor is ordered to be made bankrupt, then the debtor’s real property may vest in the bankruptcy trustee.
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QCAT FAQ
What is QCAT?
QCAT is the Queensland Civil and Administrative Tribunal. It was set up for self-represented people to deal with minor or small claim amounts of up to $25,000.00. It is less expensive and less formal than the Magistrates Court.
What are the advantages of QCAT?
The main advantages of commencing proceedings in QCAT are:
- It is a lot less expensive than commencing in the Court;
- The process can be a lot quicker than the Court; and
- QCAT is designed for self-represented people.
What are the disadvantages of QCAT?
The main disadvantages of commencing proceedings in QCAT are:
- The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items;
- Legal representatives do not have an automatic right of appearance. This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.
What are the fees in QCAT?
The fees in QCAT range from about $20.00 or $30.00 to over $300.00 for a minor debt claim, depending on the amount of the claim. You can check the QCAT Fees and Allowances page of the QCAT Website for more current fees.
Where can I get the QCAT forms
You can get the QCAT minor debt forms from the QCAT website. However, because we are awesome, you can get them here too:
- Form 3 – Application for minor civil dispute – minor debt
- Form 55 – Application to set aside or amend a default decision
- Form 6 – Request for decision by default – minor civil dispute – minor debt
- Form 7 – Response to minor civil dispute – minor debt
Where is QCAT?
QCAT is located at Level 9, 259 Queen St, Brisbane City, QLD 4000.
If you need to go to a hearing, then you may be able to appear by telephone rather than going to Brisbane in person.
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Statutory demand FAQ
What is a statutory demand?
A statutory demand is a demand for payment made to a company under the Corporations Act which raised the presumption of insolvency if not complied with. It is this legal presumption of insolvency which allows a creditor to apply to wind the company up.
What are the requirements for a statutory demand?
To be eligible to send a statutory demand you must be a creditor of the company, the debt must be $2,000.00 or more, there must not be a genuine dispute or offsetting claim, and the debt must be due and payable at the time of serving the demand.
What do I do if served with a statutory demand?
If you have been served with a statutory demand then you must either:
- Comply with the statutory demand; or
- Request that the demand is withdrawn; or
- Apply to set aside the statutory demand.
Failure to do any of these things within 21 days will mean that your company is presumed to be insolvent and the issuer can make an application to the Court for an order winding the debtor company up in insolvency.
How to I comply with a statutory demand?
You can comply with a statutory demand by doing either of the following:
- To pay to the creditor the amount of the debt or total of the amounts of the debts; or
- To secure or compound for the amount of the debt or total of the amounts of the debts, to the creditor’s reasonable satisfaction.
How to I request that the statutory demand is withdrawn?
You can write to the issuer stating your reasons for being successful in an application setting the demand aside, and asking the issuer to withdraw the demand. If they do not withdraw the demand, and you successfully apply to set the demand aside, then the issuer may have to pay the costs of the application.
How to I set aside a statutory demand?
You can apply to the Court for an order setting aside a statutory demand if you have one of the following grounds:
- You have a genuine dispute; and/or
- You have an offsetting claim; and/or
- The statutory demand is defective causing substantial injustice; and/or
- Some other reason (such as an abuse of process).
If you are applying to set the demand aside, a sealed copy of the application and supporting affidavit must be filed and served on the issuer on or before the 21 day limit.
https://stonegatelegal.com.au/statutory-demand-complete-guide/
https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/
How Long does a Statutory Demand Last?
Once served the debtor has 21 days to comply. If the debtor does not comply then they are presumed to be insolvent. This presumption of insolvency lasts for three (3) months.
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Bankruptcy FAQ
What is a Bankruptcy Notice?
A bankruptcy notice is a formal demand for payment pursuant to a final judgment or final order of $5,000.00 or more. The judgment debtor has 21 days to comply with the bankruptcy notice or they commit an act of bankruptcy.
How do I make someone bankrupt?
The most common way that a creditor is allowed to present a creditor’s petition to the Federal Circuit Court, and bankrupt an insolvent debtor is because of an act of bankruptcy caused by non-compliance with a bankruptcy notice. However, there are a number of other acts of bankruptcy which you can find at section 40 of the Bankruptcy Act 1966 (CTH).
What is a Creditor’s Petition?
A Creditor’s Petition is an application to the Federal Circuit Court for an order making a person bankrupt. A creditor’s petition if filed in the Court with the supporting documents. The order making a person bankrupt is called a “sequestration order“.
How do I set aside a bankruptcy notice?
If you want to set aside a bankruptcy notice then there are four (4) main grounds to do so, they are:
- There is a defect in the notice; and/or
- The judgment debt allowing the notice is disputed; and/or
- The debtor has a cross-demand, set-off, or counterclaim which is equal to, or more than the judgment debt; and/or
- The notice is an abuse of process.
Once again, the time limits are very strict and must be complied with.
What is the cost of Bankruptcy?
The filing fee for bankruptcy is $3,805.00 (corporate) or $1,585.00 (personal) with short form amount of $2,718.00 allowable to be claimed.
The legal fees up to the cost of the sequestration order being made will vary depending on your law firm. Please contact us for an estimate of our fees.
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Winding up FAQ
How do I wind up a company that owes me money?
If you are a creditor of an insolvent company then you may be able to make an application to wind it up. The most usual way is after non compliance with a statutory demand.
What is the cost of a winding up application?
The filing fee in the Federal Court for winding up is $4,100.00 (corporate) or $1,410.00 (personal) with short form amount of $4,230.00 allowable to be claimed.
The filing fee for winding up in the Supreme Court is $2,812.90 (corporate) or $1,190.90 (personal) with a short form amount of $4,230.00 is allowable to be claimed.
The legal fees up to the cost of the winding up order being made will vary depending on your law firm. Please contact us for an estimate of our fees.
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