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This topic covers
- Owing money (where the amount owed is less than $100,000)Â
- Dealing with debt collectors
- Responding to a letter of demand
- Responding to a Statement of Claim, including filing a Defence or Cross Claim and hearing procedures in the Small Claims Division and General Division of the Local Court of NSW
- Dealing with a judgment, including enforcement action that can be taken, for example, a sheriff seizing property or a garnishee order on a bank account or wages
This topic does not apply to complex claims, claims over $100,000 or personal injury or compensation claims. For more information about small claims, see My Money in the My Problem is about section of our website.
This topic does not cover debt related to a consumer credit contract, for example, a home loan, personal loan, credit card or payday loan. For more information, see the Consumer credit debt topic.Â
- Owing money (where the amount owed is less than $100,000)Â
| Time limit | Action |
|---|---|
| Six years | For a creditor to take court action against you for a debt starting from:
|
| Six months | For a creditor to serve the Statement of Claim on you from the date it has been filed with the Court. After this time the claim will lapse and the creditor will need to re-file. |
| 28 calendar days | To respond to a Statement of Claim, from the date it was served on you. If you don't respond, the creditor can apply for default judgment against you. |
| Nine months | For a creditor for apply for default judgment from when the Statement of Claim was filed, if you don't respond to the claim. |
| 12 years | For a creditor to enforce a judgment made against you by the Court. In some circumstances, the creditor can apply for more time if the 12 years is about to expire. |
| Six years | From the date of an order from the NSW Civil and Administrative Tribunal (NCAT) for the creditor to register the debt in the Local Court. Once the NCAT order is registered, the creditor has 12 years from the date of registration to enforce the judgment debt. |
Organisation
| Organisation | Responsibilities |
|---|---|
| NSW Local Court Small Claims Division | Hears claims for $20,000 or less. |
| NSW Local Court General Division | Hears claims for more than $20,000 but less than $100,000 (or up to $120,000 if the parties agree). |
| NSW District Court | Hears claims for more than $100,000 but less than $1,250,000. |
| NSW Supreme Court | Hears claims for more than $1,250,000. |
Legislation
| Authority | Covers |
|---|---|
| Civil Procedure Act 2005Â (NSW) | The law in relation to civil proceedings in the Local, District and Supreme Court of NSW (as well as some other jurisdictions). |
| Uniform Civil Procedures Rules 2005 | |
| Local Court Act 2007Â (NSW) | The jurisdiction and procedures of the Local Court. |
| Local Court Rules 2009 | |
| Legal Profession Uniform Law Application Regulation 2015 | Sets out the maximum amount of legal costs that can be awarded in the Local Court. |
| Common term | Definition |
|---|---|
Consumer credit contract | A type of contract where you borrow money and are given the time to pay the debt back, with fees and interest. The money is lent to you for:
This definition applies to individuals and strata bodies, but not businesses. A business loan, or loan or credit for a business purpose is not a consumer credit contract. |
| Credit | When a person borrows money and is given time to pay the debt back, with fees and interest. |
Creditor | The person who you owe money to, or who believes they are owed money. When legal action starts, they are known as the plaintiff. |
| Credit report | A report that contains information about your credit history including loan accounts, credit limits, repayment history, payment defaults, dishonoured cheques, court judgments and bankruptcy orders. For information on credit reports and how to get a copy of your credit report, see the factsheet Your credit report on the Financial Rights Legal Centre. |
Cross claim | A claim you can make in response to a Statement of Claim if you believe the plaintiff or a third party owes you money. You can't file a cross claim if a default judgment has been made against you, unless you get the judgment set aside. |
Debtor | The person who owes money, or is said to owe money, to a creditor. If legal action is started against you because it is alleged you owe money, you are known as the defendant. |
Default judgment | Judgment made in favour of the plaintiff without a hearing, when you have not taken action to defend the claim or file a cross claim. |
Defence | A response you can make to dispute a debt if you have been served with a Statement of Claim. You can't file a Defence if default judgment has been made against you, unless you get the judgment set aside. |
| Defendant | The person who has court proceedings started against them. |
Examination notice | A notice sent to you if you have had a judgment made against you and the plaintiff wants information about your income, assets and debts. The notice is not a court order. |
Examination Order | A court order a plaintiff can apply for after they have got a judgment against you. The order asks you to attend court on a certain date and time to answer questions about your financial situation. This process helps the plaintiff to identify your income, assets and debts so that they can decide on possible enforcement action, for example, a writ for levy of property or garnishee order. |
Garnishee order | A court order which tells a third party, such as your employer or bank, that they must pay your money to the plaintiff to pay a judgment debt against you. |
Judgment debt | The amount of money a court orders a defendant to pay a successful plaintiff. It can include all or part of the original amount claimed, plus court fees and interest up to the date of judgment. |
Mortgage | A contract where money is lent using real property as security for the loan. A home loan is a common type of mortgage. |
​Notice of Orders made | ​A document sent to the parties by the Court after the case. It tells the parties what order or judgment was made by the Court and if any action needs to be taken by the parties, including making a payment. |
| Plaintiff | The person who starts court proceedings against a defendant. |
Pre-trial review | The first stage of a debt case in the Small Claims Division of the Local Court. At the pre-trial review the Registrar will try and help the parties settle the case. If the case does not settle, the Registrar may set a date for the hearing and tell the parties what to do to prepare for the hearing. |
Statement of Claim | A document used by the plaintiff to start a civil case in court. It tells the Court and the defendant what the plaintiff is claiming and why. |
Writ for levy of property | A court order to the sheriff, telling the sheriff to go to the judgment debtor's house (or to the business address if the judgment debtor is a company)Â and seize property to be sold at auction. The money raised from the auction is used to pay off a judgment debt. |
| Organisation | Fee |
|---|---|
| Local Court of NSW | You need to pay a filing fee to start civil proceedings in the Local Court. Fees also apply to filing certain documents, for example, a notice of motion to apply for judgment to be set aside - see Fees on the Local Court website |
| You don't have to pay a filing fee to file a Defence to a Statement of Claim. | |
| If you can't afford to pay a fee in the Local Court, you can complete an Application to waive or postpone a fee. |
| Organisation | Forms |
|---|---|
| Uniform Civil Procedure Rules (UCPR) | Civil forms |
| Organisation | Type | Costs |
|---|---|---|
| NSW Local Court | Legal costs | You can claim your lawyer's costs if you are successful in your case. If you are unsuccessful, the Court can make a costs order against you. Costs are not capped for matters commenced by an owners corporation for unpaid strata levies. |
| Small Claims Division of the Local Court | Legal costs | Costs in the Small Claims Division of the Local Court are capped, which means you can only recover a small portion of your legal fees from the other party if you are successful. |
Services
Last updated: March 2024