News and Articles

What to do when someone owes you money

Does a tenant owe you rent? Does your boss owe you wages? You loaned money to someone and he/she did not pay you back? Pursuing people for money that belongs to you can be irritating and time-consuming. One way to recover your money is to sue the person or company owing you money (also known as a debtor), but this is generally the most expensive way of resolving a dispute. Before going to court, it is worth considering alternatives such as issuing a ‘letter of demand’ to the debtor, and mediation. In this article, we will explain to you the initial steps in your journey to recovering your debt.

Letter of demand

A letter of demand is exactly what it sounds like. This document is addressed to the debtor and contains your demand for money which belongs to you. The most effective letters are succinct and can include the following:

  • The amount owed to you in dollar value;
  • A copy of the invoice which has not been paid or a copy of the contract that has been breached;
  • The deadline for repaying the debt (usually within 7 days of the date of the letter);
  • The method of repayment (e.g. electronic funds transfer, cheque or cash); and
  • Your intention to sue the debtor if the debt is not repaid.

Take the time to ensure that you have correctly identified the debtor or debtors including address and email. You also want to make inquiries about the debtor’s assets and ascertain whether or not the debtor can satisfy your debt. If you would like an effective letter of demand to be drawn up, feel free to contact our team.


Another affordable way to resolve a monetary dispute is through mediation. It involves the parties, usually with their lawyers, attending a meeting with a mediator trained in settling disputes. At first, the mediator meets the parties and their lawyers altogether, at which each side makes an opening statement of their position, followed by some negotiation. At this stage, you want to find out why the debtor has refused to return your money. Next, the parties and their lawyers are placed in separate rooms, while the mediator moves between each room, presenting offers of settlement, and trying to bring each closer to the other’s position.

Attempting mediation is generally expected by judges before court proceedings begin.

The NSW Community Justice Centres and NSW Small Business Commissioner offer cheap mediation services.

Statement of claim

If the two options above are unsuccessful, then you can consider filing and serving the statement of claim to the debtor. The statement of claim is a written declaration by you, the creditor, containing the facts that are to be relied upon to a support a claim against the debtor, and the relief claimed. It can be an effective way of bringing the debtor to the negotiating table. However, this pathway is costly and can take many months before a trial takes place. If you do go to trial and obtain a judgment in your favour, you can legally force the debtor to repay you.

For debt up to $100,000.00, the statement of claim would be filed in the Local Court.

For debt between $750,000.00 and $100,000.00, the statement of claim would be filed in the District Court.

For debt greater than $750,000.00, the statement of claim would be filed in the Supreme Court.


Therefore, there are various options available to recover your money, and we recommend that you try resolving the dispute outside of court first. Issuing a letter of demand and attending mediation are not only cost-efficient, but they are also short in duration and have a relatively high success rate. If you need any assistance with drafting an effective letter of demand or need legal representation, please contact our team.

Disclaimer: This publication is general information only and does not purport to provide legal advice. We do not accept responsibility for any losses for reliance upon this publication.

speak to us and put your mind at ease 1300 618 888