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Alert
The information on this page is about trying to resolve your dispute before a court case has started.
If you have a dispute with someone about a debt, it is really important to try to resolve that dispute without going to court. Talk to the other person, negotiate with them, or try mediation.
It is a good idea to try to resolve or settle a dispute without going to court. Court cases take time and cost money.
You can try to resolve your dispute by negotiating directly with the other party.
If you need help, you could arrange for an independent person to assist you both through a process called 'mediation'. If you reach an agreement, you should put it in writing.
If you settle (resolve) your dispute without going to court, here are some of the benefits:
It can take months for your matter to be finalised at court. You will also have to make time to prepare for and attend court.
If you start a case at court and you lose, the court will usually order you to pay the costs of the other party. These are called 'professional costs' or 'legal costs'. Likewise, if you choose to defend a case at court and you lose, the court will usually order you to pay legal costs.
Even if you win the case and the court orders the other party to pay your costs, this might not cover all of your expenses. For example, you won't be able to claim back wages you lost because you had to attend court and couldn't work. For more information see Legal costs in Dealing with my lawyer.
Going to court can be stressful, especially if you don't have a lawyer to sort out the paperwork and do the talking in court. Before going to court, it is a good idea to think about the impact that a court case will have on you personally and whether it is worth the stress.
If you go to court, a magistrate or assessor will make a decision based on the evidence that is presented. The magistrate or assessor will exercise their judgment when applying the law to the facts, and weighing up the evidence. If you and the other party can reach an agreement without going to court, there is less uncertainty about what the outcome will be.
Negotiation is when you try to end a problem or dispute with another person, by reaching an agreement.
The first step is to think about how you would like to settle the dispute and what the other party might accept. Then, suggest a settlement to the other party.
You can negotiate by talking to the other party, or by writing a letter, or both. If the other party has a lawyer, you should speak to their lawyer rather than directly to the other party.
Negotiation can take place at any time, for example, when a problem first happens, when you are thinking about starting a case, or even after a court case has started.
If you need help negotiating with the other party, you could try mediation. This is where an independent third party can assist you and the other party to discuss your issues and hopefully come to an agreement.
Written correspondence that includes a settlement offer usually has the words 'Without Prejudice' written at the top. This means that things you say in a genuine attempt to resolve the dispute out of court can't later be used against you in court.
You should write ‘Without Prejudice’ on the top of any letter or email containing an offer to settle that you send to the other party if you do not want any of your negotiations to be used against you in court.
Sometimes you should not put 'Without Prejudice' on the top of a letter. For example, if you decide to go to court you may want to show that you made an offer to settle.
Before you write a letter of offer, you should get legal advice on how to write the letter.
Although negotiating with the other party can be very informal, if you are able to reach an agreement you should write down what has been agreed.
If your dispute is about a home loan, personal loan, credit card or consumer lease or other type of credit from a bank or credit provider, see Disputes with banks or credit providers.
Mediation is another way of solving a problem. At mediation, you and the other party, with the help of a neutral person called a 'mediator', try to settle the dispute.
The mediator helps people understand the problem, talk to each other and come up with solutions. A mediator will not take sides and cannot give you legal advice.
If you come to an agreement, you can put it in writing and you can agree to make it legally binding.
Community Justice Centres (CJCs) provide free mediation services in NSW. The staff can tell you if your situation is suitable for mediation. CJCs will then contact the other person and encourage them to participate in a mediation session. You can find contact details on the Community Justice Centres website.
For more information, see the Mediation section of the Representing myself topic.
If you are able to reach an agreement, you can write down what has been agreed and both of you can sign and date the agreement.
If your dispute is with a bank or other credit provider, you have other options. For more information see Disputes with banks or credit providers.
If you reach an agreement with the other party, it is a good idea to put your agreement in writing. A written agreement is often called 'terms of settlement' or a 'settlement agreement'.
It is a good idea to try to settle your dispute with the other party without having to go to court. By coming to an agreement, you will save time and money. The court process is expensive, takes up time and energy, and it can be stressful.
If you reach an agreement with the other party, it is a good idea to put your agreement in writing. A written agreement is often called 'terms of settlement' or a 'settlement agreement'.
There is no set form – your agreement can be handwritten or typed. The agreement should set out clearly what you have agreed with the other party. The agreement can include:
- the amount of money to be repaid
- how the money will be paid, for example by cheque, cash or electronic funds transfer
- the payment of interest on the debt
- payment by instalments and the dates the instalments are due
- what will happen if the amount or the instalments are not paid by the agreed date.
Sample: Sample terms of settlement – debt
Get legal advice if you are not sure how to settle your dispute.
Goods and services purchased from a business are covered by the Australian Consumer Law (ACL). If you are not happy with the goods or services, or if the business has not supplied the goods or services within a reasonable time, you can make a consumer claim. For more information about consumer rights and how to lodge a complaint about a business, go to the NSW Fair Trading website.
If your dispute is about a bill with a utility provider, see Electricity, water, gas and phone bills.
If your dispute is about a home loan, personal loan, credit card or consumer lease or other type of credit from a bank or credit provider, see see Disputes with banks or credit providers.
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Alert
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 contacting them. You may be breaching the AVO if you contact them.
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