Find out how to enforce a payment in ACT. For an overview on enforcing payments click here.
STEP 1: Informal Communication
What is this?
The more formal Steps 2 and 3 (Letter and potential Court action) could be intimidating for the other party, so you should first try to salvage the existing relationship before the more serious steps are undertaken. As such, you should attempt to re-establish informal contact with them by perhaps phone or email. We recommend this step because at times, the unpaid invoice could be a result of a simple oversight or misunderstanding, and a phone call at this point could be an easy fix. If you are unsuccessful with this step, proceed to Step 2.
STEP 2: Send a Letter of Demand
What is a letter of demand?
Your first call of action to chase up the money should be through a Letter of Demand. Essentially, this is a letter sent to the other party where you formally notify them in writing about the financial matter.
This letter should include:
- An outline of the dispute
- The money outstanding
- The defined period to settle the matter. If the specified time period passes with no resolution, you will need to face legal action in court.
Things to Avoid:
You should be able to form this letter yourself, or you may also choose to seek advice from a legal professional. If you choose to do it yourself, you must NOT:
- Harass the other party, because they can report it to government agencies or the police
- Attempt to mimic a court document in an effort to raise the chances of payment. This intimidation tactic is illegal.
Potential Outcomes of a Letter of Demand
After sending the letter, there are a few outcomes which can result:
- They might pay the full amount owed.
- They could formally prove that no money is owed.
- You and the other party may be able to negotiate a compromise, this could be in the form of installments or part payments.
- They could ignore it or respond unsatisfactorily, in which case you will need to progress to Step 2.
STEP 3: Small Claims debt recovery action
What is it?
Basically, this is a relatively informal local court action, which you can do yourself. It is applicable to money, goods purchased/delivered, labour or a combination of these. This is dealt with by the ACT Civil and Administrative Tribunal (ACAT). Within ACT specifically, the Small Claims Court can deal with claims up to $10 000. Many choose to be self represented, however it is possible to have lawyer representation, despite the fees.
How to do it:
This process has four sub-steps.
1. Preliminary steps:
a. You will need to fill out a Debt Application form
[found on the ACAT website]:
i. This should include both your name and address as well as the other party’s too
ii. The ACAT will stamp this form, then you must either leave the form with ACAT for them to mail to the other party or you can personally deliver it to them
– N.B. If you choose to deliver it personally, you must complete Affidavit (i.e. a sworn statement of fact)
2. At this point it is important to remember that you can attempt to negotiate for a settlement at any point before the hearing. If no agreement is made and the hearing date is reached, then you should proceed to court and obtain a favourable judgment.
3. At the hearing, you (complainant) will deliver your case, followed by the other party (defendant). In doing so, both, under oath, will provide relevant evidence (e.g. receipts, photographs, bank statements etc.). The Magistrate will then make a legally binding decision.
4. Once the favourable judgment is given to you, you will need to recover the money. There are two options to go about this:
a. Obtain a writ of execution against the debtor’s property (i.e. a court order granted to obtain the funds from the
b. Secure a garnishee order against their wages or bank account (i.e. a court order requiring the other party’s employer to withhold money from wages, then, the employer using those funds to repay you).
Still unsure of how to recover your money in ACT or if you need a lawyer to sign off on the Letter of Demand? Contact a LawPath consultant on 1800LAWPATH to learn more.