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Legal proceedings

Information about having to face your creditors in court

If you, or someone for whom you are guaranteeing a debt, have been consistently behind in repayments, the credit provider may decide to commence enforcement proceedings against you. However, the Consumer Credit Code requires that before this takes place, the credit provider must:

  • warn the debtor, guarantor or mortgagor in writing and allow them 30 days to rectify the problem;
  • (in the case of a guarantee) get a judgement against the debtor from a Tribunal or Court, and grant the debtor 30 days to pay before pursuing the guarantor;
  • get a Court Order before possessing mortgaged goods if the amount outstanding is less than 25% or up to $10 000 (whichever is less) of the total credit provided.

Note that a debtor, mortgagor or guarantor can attempt to obtain a postponement of enforcement proceedings from their credit provider. If you receive written notice that you need to go to court (whether by a summons or a statement of claim/liquidated claim) you should take action immediately. If you are certain that you owe the debt, pay the amount in full if you can. Otherwise, make an arrangement to pay by instalments.

If you dispute a debt because you believe it is not yours, the debt has already been settled, the total amount demanded seems too high, or you think that you have a defence:

  • obtain independent legal advice at once; then
  • if it is determined that you do have a defence against payment of a debt, you will need to file documents in court as soon as possible to avoid having a court judgment entered against you.

If your credit provider does start legal proceedings against you to settle an outstanding debt, these proceedings will be 'civil' as opposed to 'criminal'. This means that your situation does not concern the police and could never result in you having to go to jail.

If you are involved in a linked credit arrangement with a credit provider and supplier, the Code enables you to claim damages from the credit provider if the supplier breaches the contract, misrepresents the deal or there are problems with the goods.

For more information about civil proceedings, see the Department of the Attorney General publications: