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For Debtors

The information in this section is aimed at debtors owing debts of no more than $12,000 (which is the limit for claims in the Civil (Minor Claims) Division of the Magistrates Court of South Australia as of 1 August 2016).

The information is largely reproduced (with permission) from the booklet Going to Court for a Debt? by UnitingCommunities.

If you owe a debt to a subcontractor or supplier in the building and construction industry, then you may be facing a claim under the Building and Construction Industry Security of Payment Act 2009 - for further information see Debts in the Building and Construction Industry.

Many of us go through a time when we genuinely cannot afford to repay money we owe. However, if you are being pursued for a debt which you believe you do not owe, you should question the debt without delay (see 'Disputing a debt').

If your problem relates to a house repossession or mortgage arrears, you should get advice from the Legal Helpline on 1300 366 424 or a financial counsellor as soon as possible. It is far better to deal with the problem quickly.

If you are the director of a company, and the debt is owed by your company to the judgment creditor, unless you have given a personal guarantee, you are not liable to pay the debt. This is so even if the company cannot pay or has no money.

Being pursued for a debt

There are laws about the behaviour creditors and debt collectors can engage in when pursuing you for a debt.

Debt collectors must be licensed and they are not allowed to harass or threaten you. If the behaviour is serious and you feel you are being harassed or threatened you can make a report to Consumer and Business Services on 131 882 (who deal with licencing of debt collectors). You can also ring the Police Assistance line on 131 444

What a creditor/debt collector cannot do

  • use abusive or threatening language
  • threaten to have you sent to gaol for non-payment
  • threaten to harm you or your property
  • block access to your property
  • enter into your property if you have refused permission, or fail to leave when you ask them to
  • threaten to tell your employer, neighbours or family about your debt
  • threaten to take and sell item/s of your property when they have no right to do so
  • ring you frequently (e.g. four ior more times a week)
  • ring you at unreasonable times (e.g. before 7.30 am or after 9.00 pm)
  • visit you or ring you at your place of work if you have asked them not to and have provided an alternate contact address and phone number
  • send you letters that look like court documents but are not

See Fair Trading Act 1987 s 43

See ASIC's MoneySmart information 'Dealing with debt collectors'.

See also ASIC's Regulatory Guide 96 Debt collection guideline: for collectors and creditors.

Do I have to pay for debt collection fees?

Often creditors or debt collectors will try to include their costs in the amount being recovered. A creditor or debt collector can only claim debt collection fees from you where you have agreed to them specifically prior to entering into your contract. For example, where you have agreed that you will be liable for the cost of debt collection in the event of default. This is often the case with credit contracts.

If you are unsure as to whether you agreed to pay debt collection fees, seek legal advice.

Financial Counselling

A financial counsellor can help you with negotiations with creditors, and give you options regarding dealing with your debts. Their services are free. The National Debt Helpline number is 1800 007 007.

Debt collectors must be licensed and they are not allowed to harass or threaten you. If you feel you are being harassed or threatened you can make a report to Consumer and Business Services on 131 882 (who deal with licencing of debt collectors). As a last resort, assuming that there are threats of physical violence, you can also ring the Police Assistance line on 131 444.

Disputing a debt

You may be able to dispute a debt in certain circumstances.

The following may provide defences to a claim against you:

  • agree that you owe the debt but do not agree with the amount
  • have already paid the debt
  • do not think the debt is yours
  • the debt is statute-barred

as an example, you agreed to the contract but you:

  • were told something that was not true (you were misled into signing)
  • were forced to sign or were taken advantage of (even by a family member)
  • did not receive goods or service for which the debt is due
  • did not have the capacity to repay the credit (e.g. credit card) at the time you signed the contract (see also consumer credit)

You need to ensure that you have as much information as possible to prove your defence, although you may not have everything in writing. If you are relying on what you were told, make a note of as much detail as you can remember. Sometimes you will be asked to recall that information many months or even years later and it is much easier if you have a record.

Statute Barred Debts

  • If the debt is more than six years old and you have not made a payment or acknowledged the debt in writing it may be "statute barred". This means the creditor cannot legally collect the debt or take court action.

A creditor is legally barred from pursuing an unsecured debt if they have failed to do so within six years of the debt arising. If the claim against you is in relation to a loan, the date from which the six years runs is the date of the first missed payment, not the date of the loan.

Any action on your part may affect this limitation period. For example, if you have made any payments during this time then the six year period begins again. The same is true if you have made any communications in writing admitting to owing any money or a court order has been made in that time against you. If you are unsure about whether this is the case, seek legal advice before you speak to your creditor or make repayments.

Where a debt is secured by a mortgage over property the period during which a creditor can make a claim for payment is 15 years.

Be aware that you may incur additional costs if the Court finds that there was no basis for questioning the debt.

If you think you might have a defence you need to get legal advice immediately. You will only have a period of 21 days from the date you received the claim to file your defence. Get help with working out whether or not your defence has merit (eg is it a good defence) and how to set it out.

If you do not think that you should have to pay a debt it is important that you talk to the creditor or get help.

If you are unable to come to an agreement with the creditor you may be able to organise mediation or if the creditor is a member of an External Dispute Resolution Scheme, you can lodge a complaint with the scheme. Not every organisation is a member of an EDR scheme so it is best to get legal advice about your problem. For more information, see 'External dispute resolution'

External dispute resolution

How can External Dispute Resolution (EDR) schemes help?

EDR schemes help people resolve problems with some businesses.

If your debt is from one of the following businesses there is an EDR scheme that could help you sort out your debt (even if the debt has been passed to a debt collector). These businesses are required to be members of the EDR schemes:

  • insurers
  • credit providers and brokers
  • gas or electricity providers
  • telephone or internet providers
  • financial advisers

The scheme will look at your complaint by considering the facts provided by you and the business. The scheme may even help you to present your complaint. This does not mean that any complaint will be decided in your favour.

The scheme will get the business to provide a response to your issue and request, and if you are still not satisfied will look into your matters. They will refer to the law and good industry practice, and what is fair and reasonable in all of the circumstances to decide on the matter.

You have nothing to lose by going to EDR and they will make the business listen and respond to you or provide you with financial hardship options. In the case of a legitimate creditor mistake EDR can enforce a change. However, they cannot force companies to waive legitimate debts, fees and charges on the basis of financial hardship, althought they can make recommendations about dealing with customers who are facing financial hardship.

What are the benefits of using an EDR scheme to help with a debt problem?

Going through an EDR scheme is free for consumers. EDR is independent, easy to access and outside of the court system.

Can a business or creditor take court action or other legal action if I have taken a problem to EDR?

No. While your matter is with the EDR scheme the business, creditor or debt collector cannot take enforcement action (e.g. repossess secured goods or take court action).

What if we reach an agreement?

Where an agreement is reached about the amount of money owed it is possible to make a court enforceable payment agreement recording the amount owed. It is recommended you see a financial counsellor to make sure that the new payment plan you are about to agree to is realistic in your financial circumstances.

When can I take a matter to EDR?

You can take an issue to EDR anytime after you have tried to talk to the creditor about your problem and are not happy with their response or did not get a response. Even if the business has started court proceedings, you can still go to EDR. However, you cannot raise an issue with EDR if judgment has been entered, see 'Judgment'.

What do I have to do to take a matter to EDR?

Talk to the business first. It is a requirement that you try to resolve the issue with the business first, before going to an EDR scheme.

Contact the business to discuss your issue, and ensure that they are given all the information. If you cannot resolve the issue, or the business refuses to agree to your proposal, you should lodge a dispute with the relevant EDR sheme.

Contact the EDR scheme

Contact the EDR scheme that relates to your creditor and debt.

Financial Ombudsman Service (FOS)

1300 780 808

Credit Ombudsman Service Ltd (COSL)

1300 780 808 or 1800 138 422

Telecommunications Industry Ombudsman (TIO)

1800 062 058

Energy and Water Ombudsman SA (EWOSA)

1800 665 565

If you are still uncertain or need more help contact a financial counsellor.

What if the creditor or business won’t help me?

You can complain to one of the External Dispute Resolution schemes (EDR).

If the business is not in an EDR scheme, you could try community mediation services (see 'Community Mediation Services'). If the business has already served you with a Final Notice of Claim (Form 1A) or commenced legal proceedings against you (Form 1), mediation is available through the Magistrates Court, which provides another way to settle your dispute.

Paying a debt

I owe the debt and the amount is correct – What can I do now?

If you have considered the points earlier and agree that you owe the money, you have some choices. It is best to contact the creditor as soon as possible even if you cannot pay. Ask the creditor to hold action on the debt while you work out your options, set out below. Then once you are clear about your options you can get back to creditor with an offer or request.

Your options include:

  • Asking the debt be waived
  • Repaying the debt in full or offering a smaller lump sum amount
  • Asking for a payment arrangement
  • Filing for bankruptcy
  • Doing nothing

There is more information about each option below. First though and before you decide what to do work out your financial position and read the information below 'What if my only income is from a Centrelink payment?' and 'What if I am in financial hardship?'

How do I work out what my financial position is?

Having a money plan for your average income and expenses (e.g. average for a fortnight or month) will be very helpful. It can give you a snap shot of your situation, what is available for your most important or essential expenses and what is (or is not) available for your debts.

For useful money planner, visit the Money Smart website.

If you need help to work out your income and expenses or options contact a financial counsellor on 1800 007 007. They will also help with negotiations with your creditor and can offer you alternative options.

What if my only income is from a Centrelink payment?

Your Centrelink income is intended to pay your living expenses, and is generally not available to non-government creditors.

A creditor or debt collector cannot make you repay a debt from a Centrelink payment if you do not agree to do so. They must also make sure that they do not mislead you into believing you must make a payment from a Centrelink payment.

A court cannot make you repay a debt from a Centrelink payment if you do not agree to do so.However, Centrelink and childsupport debts can be taken from you Centrelink payments. You need to also take into account any Court fines.

If the debt is linked to an ongoing service such as electricity, phone or rent, the creditor may be able to take action other than making you pay from your Centrelink payment. This could include disconnecting your service.

If you have assets (e.g. your house or car) the creditor can take court action to get a warrant of sale on assets or put a charging order over your house (see 'Enforcement'). Note that assets do not include basic household goods such as your fridge, washing machine or household furniture.

What if I am in financial hardship?

If you cannot meet regular repayments on debts such as a personal loan or home loan for a short time (e.g. because of temporary illness, unemployment or relationship breakdown) you can ask the credit provider for a hardship variation. Many businesses including credit, energy, phone and internet providers, insurance companies and local councils have staff to assist customers in financial hardship. There are laws or other requirements for these businesses to listen to their customers who say they are in financial hardship and provide them with special arrangements to assist them while they remain in financial difficulties.

Remember to ask to speak to someone about hardship if this is the case. You need to tell the business everything about your situation. If they still do not agree to help you with your hardship, ask to speak to a supervisor or other person.

What can I say to a business if I cannot pay and am in financial difficulty?

Contact the business and:

  • Say that you are in financial difficulty and explain your circumstances
  • Ask what options there are for you or request an arrangement that will help you for a period of time

Short term arrangements may include postponing, reduced payments or even make no payment for a period of time (up to 3-6 months). Other financial difficulty options that may assist include paying by instalments (e.g. fortnightly repayments of energy bills or council rates) or organising payments to line up with your pay day. Avoid borrowing more money to deal with short term debt - it is better to arrange things around your current income rather than get into further difficulties.

What if my situation does not improve and I cannot return to normal or full payments?

If your financial situation does not (or is not likely) to improve in the short term (three to six months), you may wish to consider other options. These might include reducing your expenses, selling an asset, requesting a waiver, or as a last option filing for bankruptcy.

Seek assistance from a financial counsellor to help discuss your hardship options with the creditor.

For more information on bankruptcy go to the Australian Financial Security Authority (formerly ITSA) website ( or phone 1300 364 785

Ask for waiver of the debt

You could ask for a waiver if you cannot make any payment and particularly if you are on a low income such as a Centrelink pension or benefit, you have not assets (e.g. do not have a mortgage or own your own home) and your position is unlikely to change. See a financial counsellor for assistance on how to ask for a debt waiver.

Repay the debt in full

By paying it this will mean the debt will not increase because of court costs and interest being added. Do not do this if you really cannot manage to pay without causing more debt or financial hardship to you or your family.

Offer a reduced lump sum to finalise the debt

Sometimes a creditor may agree to accept a reduced lump sum payment. A debt collector may have bought your debt from the creditor for a reduced amount and will accept a lower amount to pay it out. This may be an option but think about whether you can really manage the payment.

Negotiate a repayment arrangement

You can try to negotiate a payment arrangement with the creditor or debt collector by asking to pay at a later date, payment by instalments or reducing the regular payments. However make sure that your repayment plan is realistic – do not commit to a plan if you think you might still have trouble paying. Do not be afraid to tell the creditor if you cannot make any payments.

If the creditor does not respond to your request, and continues to threaten legal action, you may be able to take the matter to External Dispute Resolution. Remember your options are limited with debts linked to ongoing services (such as current energy account or council rates).

Section 182 of the Local Government Act 1999 provides that local councils may, if satisfied that a ratepayer is suffering hardship, postpone payment of rates on terms. If you are struggling to pay your rates, ask the Council for help with a payment arrangement or even postponement until you can get back on track.

Do nothing

This can seem like the easiest option. However, if you ignore a debt, you will probably still get the calls and the letters and eventually a court claim, whether you owe the money or not. The debt will also get bigger with costs and interests added once court action starts. Your credit record is likely to be affected and may affect your ability to obtain credit in the future.

File for bankruptcy

Bankruptcy is a way of saying “I can’t pay my debts!” The general effect of bankruptcy is to wipe the slate clean, however in most cases it should be considered as the last resort.

The advantages of bankruptcy include:

  • You would be released from your debts including debts that may go or have gone to court.
  • Necessary household furniture and personal things cannot be taken in bankruptcy. Vehicles and tools or trade worth less than a certain amount cannot be taken.

The disadvantages of bankruptcy include:

  • You may still have to pay certain debts such court fines, child support and tax.
  • A trustee, who is appointed to manage your estate, can sell your assets such as a house to pay the debts.
  • You may have to make contributions if you earn over a certain amount (currently $41,823.60 for a single person with no dependants) and indexed each year.
  • Bankruptcy lasts for a period of 3 years but it is noted on your credit record for 7 years from the date your bankruptcy starts.
  • Some restrictions on overseas travel and your ability gain employment in some roles.

If you need talk about your options including bankruptcy seek help from a financial counsellor. See also the chapter on Bankruptcy.

What about my credit rating?

For further information, see the section CREDIT RATINGS.

Being taken to court

A creditor can take steps to recover a debt from you through the formal court process.

In order to recover the cost of the court fees from you, a creditor is required to give notice of an intention to sue. This may be in the form of a letter of demand or a Final Notice of Claim (Form 1A). This notice gives you 21 days in which to try and resolve the matter or seek mediation.

The creditor can then file a Claim (Form 3 for a claim under $12,000), which the court will send to you at the creditor’s request. The creditor has paid a fee to the court which is then added onto the claim amount. There are other fees that can also be added. The court does not check that the details of the claim are true. It will be up to you to accept the claim or not - for further information see Disputing a debt.

Do not ignore this form - you will lose important rights. Read the details carefully. Ask for help if you do not understand anything in the forms or you are not sure what you can do now.

You have 21 days from the date the claim was given to you to act (see options below). After that a judgment about the debt may be made and the creditor can take enforcement action against you through the court.

Judgment about the debt can happen without you being involved. If you do nothing judgment against you will be “a rubber stamp” – it will be automatic and you will not know it has happened (see 'Judgment'). You will then receive another notice from the court to enforce recovery of the debt.

See Magistrates Court (Civil) Rules 2013 r 60(1).

How will I get the court forms?

They will be delivered (served) by an authorised person working for the creditor and can be delivered to you almost anywhere (e.g. at home or work).This is called serving the claim and you do not have to be there to be officially served. It can be posted to you by the court or given to someone else at your home or work as long as they are over 14 years old. The Court officer or authorised person will do an affidavit saying how the claim was served on you. If there are doubts about what happened, you can ask for a copy of the affidavit.

What are my options?

  • You can pay in full
  • You can negotiate a payment arrangement
  • You can sign the “consent” section on the form

Read the next section carefully before deciding what you will do next.

I don’t think I should have to pay

There may be legal reasons why you do not have to pay some or all of the debt. You can dispute all or part of the amount owing or you may be in financial hardship (see 'Disputing a debt' and 'Paying a debt'). You still have these options but must act within 21 days.

You could also take the matter to an External Dispute Resolution (EDR) Scheme if the creditor is the type of business that must be a member of an EDR scheme (see 'External dispute resolution'). It is a free service. An EDR process will stop the court action whilst the master is being investigated. Not all creditors are members of EDR schemes.

If there is not an EDR scheme talk to the court registry about what you can do to get the court to stop further court action by the creditor including filing a defence or counter-claim (if there is one). You can get legal or financial counselling advice to help fill in the forms.

You can call our free Legal Help Line on 1300 366 424.

Whatever you decide to do you must do it within 21 days of the date that you were given the claim as at the end of that time the creditor may ask for judgment to be entered on the debt. This legitimises the debt. There are a range of enforcement options the creditor then has (see 'Enforcement').

How do I file a defence or counterclaim?

To file a defence, you fill in a Defence (Form 4) and take it to your nearest court within 21 days of receiving the Claim (Form 3). Your defence must be legitimate and must be able to be proved see 'Disputing a debt'. Ask for legal advice about what you should say in your defence. Remember that if you admit the debt, but simply cannot afford to pay it, you are better off negotiating a payment arrangement. Being unable to afford to pay is not a defence to a claim, although if you dispute the amount, you should say so. Filing a defence carries with it the risk of extra legal costs if you can't prove what you say happened, and the Court rejects your defence. So get advice on whether or not your defence is valide.

If the creditor owes you money, you may be able to file a Counter Claim at the same time as your defence (Form 5). You need to pay a filing fee to lodge a counterclaim, but not to file a defence. You need to get legal advice about whether or not you have a counter-claim, or if it is a defence. An example of a counter-claim might be where you have not paid for building work, but the building work is defective and has caused you other loss.

What happens after I file a defence or other form to dispute the debt?

Once you have filed a Defence or other application with the court you will receive a notice telling you to attend a Directions Hearing. You must attend this hearing. If you do not attend within 15 minutes of the appointed time judgment may be decided against you without anything else happening. The creditor will also be required to attend the hearing [see Magistrates Court (Civil) Rules 2013 r 85].

The Magistrate or Registrar at the hearing will listen to each party briefly and determine whether there is any possibility of a resolution. The Magistrate or Registrar will encourage both parties to come to an agreement and will provide some assistance to help this happen. If the matter can’t be resolved the Magistrate or Registrar will explain the next steps.

I owe the debt – what can I do now?

You can pay in full

It is an option but be careful because it may create additional hardship for you and your family and increase the total debts you have. The creditor will probably also want you to pay their legal costs. The court process stops if you pay in full.

You can still negotiate with the creditor about making payments

You can still make payments or continue to negotiate directly with the creditor even after you receive the Claim (Form 1) from the court. If you wish to dispute the debt, get some legal advice. Depending on the nature of the debt, you may be able use an external dispute resolution scheme (see 'Disputing a debt' and 'External dispute resolution').

You can sign the ‘consent section’ on the Claim (Form 1)

If you sign this section of the claim and return it to the court it is acknowledging that you owe the money, agree with the amount stated, and that you consent to the creditor getting a court judgment against you. If you sign this section of the form you cannot file a defence later.

If you are in financial hardship or on a Centrelink payment (see 'Paying a debt'). You can go to External Dispute Resolution (EDR) if applicable. This stops further court action

What if I ignore the Claim (Form 3) and do nothing?

The court will assume the creditor’s claim is correct. The creditor will ask the court to enter judgment on the debt. This means the creditor can take enforcement action against you to recover the debt. The original amount claimed, plus costs, plus interest in some cases, becomes the amount you owe.

Will I go to gaol?

You cannot be gaoled for failing to pay your debts. However, the court can imprison you for up to 40 days for disobeying its orders, such as refusing to attend court or refusing to pay if you have the money. Imprisonment for breaching a court order is a penalty for showing contempt to the court and is not an alternative to payment of a debt. However, being imprisoned is rare and you will be given plenty of chances to rectify the problem, and you will not be imprisoned if the reason for not being able to pay is that you cannot afford to.

Judgment and Enforcement Action

If you take no action or do not reach a satisfactory agreement and have not filed a defence within 21 days after you receive the claim, the creditor can automatically get judgment entered on the debt without you being involved or knowing that it has happened. This is called default judgment because you have not answered the claim with a defence.

Judgment can also be obtained if you file a defence, but do not go to Court for the directions hearing or trial, or if you lose your case (your defence is unsucessful).

The Court enters judgment on your debt which means that you legally owe the money. You will not be notified that this has happened. The creditor can now take other action through the court to recover the debt.

What can the creditor do now?

The creditor can now take enforcement action. They can:

  • ask the court to summons you to appear at an Investigation Hearing
  • take certain goods (Warrant of Sale)
  • ask the court to make a Charging Order over any assets of value (most likely your house if you own one)

The creditor can also go to the Federal Court to have a notice issued to make you bankrupt. This is unlikely if you do not have assets such as equity in a house.

All of these actions can have a huge impact on you and your family, particularly if you have assets. Get legal or financial counselling advice as soon as possible so that you know what your options and rights are.

Investigation Hearing

Most often the first enforcement action the creditor takes in the Magistrates Court will be to ask the court to issues a summons to the debtor to appear at an Investigation Hearing. If the judgment is for less than $10,000 and does not arise out of the carrying on of business, this is the first enforcement process that the creditor is allowed to take, unless they make an application.

The purpose of the investigation hearing will be to determine whether you can pay the debt and if so, how you will pay it. It is not a chance to deny that you owe the debt.

Some people may find the court process confusing and stressful. There are several important things for you to know before going to court. The process and your options are discussed in more detail below see Investigation Summons.

The rest of this section talks about other enforcement steps that can be take against you to recover a judgment debt.

Take your goods – Warrant of Sale

The court has the power to authorise the seizure and sale of your property (real estate and personal property). This means a sheriff will come to your house to make a list of things that could be taken and sold to pay your debt. They cannot take items that would be protected in bankruptcy such as household goods and furniture, personal things, a car (valued under a certain amount ) and tools of your trade (under a certain amount). (Note: If you have a car or tools of trade worth more than the protected amount, the sheriff could take the item/s and apply the whole amount of the sale proceeds including the protected amount to the debt.)

After all of the creditor’s and court costs and interest are taken out of sale proceeds, any remaining amount will be given to you.

The creditor can have a warrant of sale issued against your house if there is available equity (that is any money you owe on a mortgage is less than the value of the house). Usually a creditor will have to go before a Magistrate to ask for a Warrant of Sale to be issued, especially if they have not tried an investigation summons first. In any case you can apply to the court to seek an instalment order instead of the original seizure or sale of assets. Contact the Court Registry for advice on how to do this.

Charging Order

A legal "charge" is placed on some item of your property, typically land or property. It does not mean that a creditor will obtain their money immediately, but they will retain a legal "charge" over your assets which give the creditor a legal claim over some or all of the proceeds of the sale of those assets when you sell them.

Force you to become bankrupt

If your debt is over $5,000 a creditor can start a process of applying to the Federal Court to have you declared bankrupt. The creditor is unlikely to do this if you do not have assets such as a house or car as they will have to pay an initial fee. You may choose to become bankrupt voluntarily (see 'Paying a debt' and Bankruptcy ).

Investigation Summons

A judgment creditor has several options to make you pay the debt. The most common is the investigation summons, which is explained in detail in this section.

What is an investigation summons?

The creditor has had judgment entered against you. The summons is a court document requiring you to attend court on the date and time listed on the form. The hearing will be to look at your financial position to determine whether you are able to pay the debt and if so, how you will pay it [see Enforcement of Judgments Act 1991 s 4].

A financial counsellor can assist you in filling out the form showing your income and expenses, which is included with the Summons. The services of a financial counsellor are free, and they are very experienced at doing this work. You can contact a financial counsellor on 1800 007 007. Try to do this before you go to Court, so that you are not trying to think of your expenses and income under pressure.

What if I do not attend the hearing?

If you do not attend within 15 minutes of the appointed time and wait until your case, the creditor may ask the court to issue a warrant for your arrest. Then a Sheriff will contact you to arrange for you to attend the court for a further hearing. It is not like a criminal arrest, but you will be required to attend Court and additional costs get added to your debt.

If you cannot attend Court because of illness or other unforeseen circumstances, you need to contact the Court in advance. However, putting off going to Court will not address the problem and the debt will not go away on its own. You are better off going to Court and trying to work out what is feasible to pay the amount owing.

I don’t owe the debt. What can I do?

As noted on the summons “You may apply to the trial court to set aside this judgment if you have an arguable case.....” This means judgement was entered against you because you did not file a defence within 21 days of the service of the claim. If you now wish to dispute the debt you can talk to the court registry (phone 8204 2444). They can advise you about the forms to fill in to get the judgment set aside so that your dispute will be looked into. However, you need to explain to the Court why you did not file your defence within the required time as well as demonstrating that you have a good defence. This means that your defence must be valid, and not just because you cannot afford to repay the money owing.

You can also call our free Legal Help Line on 1300 366 424 for advice.

See 'Disputing a debt' and 'Being taken to court'.

What is proof of service?

For enforcement procedures the court requires proof that the summons has been served on you personally by the Sheriff [see Enforcement of Judgments Act 1991 s 4(3)]. The person who served you must complete an Affidavit of Proof of Service which is sworn before a JP or solicitor.

This is the first I have heard about this debt. What can I do?

You should have received a Claim (Form 3) at least 21 days (but this period is usually much longer) before receiving the Investigation Summons from the Court. The Investigation Summons must be given to you personally.

Phone the court registry on 8204 2444 quote the action number (top right hand side of the summons) and ask for details regarding the service of the claim, and the address where it was served. You may have received the Summons in the post, or someone handed it to you personally. You can ask to look at the Affidavit of Proof of Service form which is on the Court record to find out how the creditor served you, if the claim did not reach you. You may be able to have the judgment set aside if there is a legitimate defence and you can explain why you did not know about the Claim.

I owe the debt. What can I do?

It is not too late to try and negotiate a payment arrangement with the creditor before going to Court on the Investigation Summons. If you need help contact a financial counsellor and it is free to see one. If the creditor or debt collector will not talk to you or wants more than you can afford then you will have to go to Court.

What happens at an Investigation Hearing?

The purpose of the hearing is to look at your financial position to determine whether you are able to pay the debt and if so, how you will pay it.

This hearing is called a ‘closed court hearing’ which means that when you enter the courtroom the only other people in the room will be court officials and the creditor. Sometimes small business or individual creditors will represent themselves at court. Larger businesses will pay a para legal to do this for them. The most important court official is the Registrar, an officer of the court who has certain limited powers to make decisions and court orders. You will be required to give sworn evidence about your ability to pay, and you are required to be truthful about your income and expenses, as well as your assets.

You cannot argue whether you owe the money or not at this hearing. If you get to this stage and you don’t think you owe the money you should tell the Registrar at the beginning of the hearing. Your hearing may then be adjourned to allow you to file your application to set aside the judgment. See above "I don't owe the debt. What can I do?" or Disputing a debt for additonal information.

The Registrar will make sure that you and the creditor are treated fairly. His/her duty at the hearing is to make a court decision about the next step.

How can I prepare for the hearing?

There will be a financial statement (also known as an Income and Expenditure Form) attached to the summons. It is very important that you complete the financial statement with all your income and expenses and take it into the hearing with you.

Note: The Income and Expenditure Form asks you to include any income from your spouse/partner. If you include this income it is very important that you also include all of the expenses and debts that you and your spouse/partner have.

Do not be afraid to seek help. Contact a financial counsellor as they can help you prepare the form, and explain the court process to you and provide support and information on your rights and what you can say when you get into the court hearing. Courts sometimes have financial counselling services available, so take advantage of this service, or you may like to ring 1800 007 007 to get further advice and help.

The court can only make an order for payment on what money you have left after the necessary living expenses for you and your family and other debts have been paid [see Enforcement of Judgments Act 1991 s 5(3)]. If you cannot afford to make any repayments, your income and expenditure statement will need to show this. The court will not make you pay more than you can afford even if the creditor wants more.

What can I say in court?

You can make an offer of instalment payments of a certain amount per fortnight or month or a lump sum. This should be an amount that your financial statement shows that you can realistically afford.

You can ask for an adjournment to

  • seek advice from a financial counsellor or a legal representative
  • negotiate further with the creditor
  • consider other options such as bankruptcy or selling an asset
  • increase your income from paid employment
  • explore other payment options or
  • apply to have judgment set aside (see 'Disputing a debt').

You can say that you cannot pay because you have no money after living expenses and other debts (your financial statement would show this) or because your only income is from a Centrelink pension or benefit. It is very important that you speak openly if you cannot pay and do not agree to a repayment amount just to get out of the court. This will cause problems later. Remember though the creditor may have other options to recover some debts e.g. councils can force the sale of home for council rates arrears or can wait until property is sold.

What decisions or orders can the court make at an Investigation Summons hearing?

The Registrar can make a number of decisions or orders that include:

  • an order that you pay the debt immediately or within a specified time (if you have the means to pay)
  • an order that you pay the debt by instalments
  • adjourn the matter

The Registrar may also make no order at all.

Make an order for payment by instalments

If your financial statement indicates that you can afford to make payments of the debt the court will issue a payment order with specific amounts and due dates (e.g. fortnightly or monthly instalments to the creditor until the debt and costs are paid).

Once a court order for payment is made you must make the payments exactly as ordered until the debt is paid off as well as any court fees and interest. If you miss any two payments ** the creditor can take further action against you that will result in additional court and creditors costs and interest being added to the total debt. You can always pay more but not paying a court order for the higher amount will have serious consequences.

Missing payments is considered to be failing to comply with a court order – the creditor can then take further action including requesting the court send a summons to you to appear at an Examinations Hearing [see Enforcement of Judgments Act 1991 s 5(5)].

** Note: This means any two payments not two payments in a row.

Make no order

The court cannot make an order that would put you into financial hardship. This means that the court accepts that your income and expenditure statement clearly shows you cannot make any repayments or that your only income is a Centrelink payment and you do not agree to offer any payments.

If your situation is unlikely to change the Registrar will not make an order but will set another court date for a time in the future, e.g. 3-6 months ahead, to review your financial position. You still legally owe the debt but are not required to make payments during this time.

You will then have to attend the next hearing with an updated financial statement. If there has been no change then the court still may not make an order. However, If, your income has increased or expenses decreased e.g. you were on a Centrelink benefit and now have income from paid employment then you may now have capacity to pay the debt and an order could be made.

The creditor can still issue a bankruptcy notice or put a charging order over property you own, which restricts the sale of your property without payment of the debt.

Adjourn the matter for further investigation or advice

A short adjournment may be made to give you the time to gather further evidence or information about your finances or to seek legal or financial counselling advice. See above for the reasons you might ask for an adjournment.

The debt does not go away if this happens.

What if I cannot pay a Court Order?

If you find you cannot make a court ordered payment you must apply to the court to change or stop a court order. You should either contact the court registry on (8204 2444) and let them know immediately or get in touch with the creditor and tell them. The court will then review your financial circumstances. This will also stop the creditor taking any further action against you and avoid further court appearances and additional costs being added to the total debt.

You also have other options such as filing for bankruptcy yourself (see 'Paying a debt') but you need to think very carefully about if this is the right thing to do because it has far reaching consequences which you may not understand. Get some legal advice from the Legal Helpline 1300 366 424 or get in touch with a financial counsellor before taking this step.

What if I want to make a complaint about the Court?

If you have a complaint about the way you were treated by a court official for example use of insulting, racist or sexist language you could complain to OmbudsmanSA.

Telephone 08 8226 8699 Toll free 1800 182 150 (outside metro) Email or the Courts Administration Authority, (08) 8204 2444,GPO Box 1068, Adelaide SA 5001 or

I missed payments and have an Examinations Summons – what happens now?

If you miss making any two payments the creditor can ask the court to issue a summons to appear at an Examination Hearing [see Enforcement of Judgments Act 1991 s 5(5)]. At this hearing you will have to explain why you have not made the payments. The court will want evidence of your financial circumstances again and will want to know why you did not make the payments or inform the creditor.

Following the Examination Hearing the court has three options:

Order you to pay the arrears and continue the ordered payments

If the court determines that you had no good reason to miss payments they may order you to pay all missed payments as well as the original ordered payments.

It is important to make sure you do not commit to a payment order that you cannot afford. Be very clear with the court if you cannot afford to make any payments or if your financial situation has changed since the first order was made.

Missing more payments will be a breach of a court order and could lead to a Warrant for Commitment (Prison Term) [see Enforcement of Judgments Act 1991 s 5(7)]. The debt will remain.

Issue a new court order or no order

If your financial situation has changed since the first order was made and you cannot afford to make any payments or your only income now is from a Centrelink payment the court may make no order. The debt does not go away – you may be asked to return to court at a later date to review your capacity to pay.

The court may make alternative arrangements for payments depending on the evidence you raise at the hearing about changed financial circumstances or financial hardship.

Issue a Warrant of Commitment (Prison Term)

Although rarely issued, the court has the power to issue a warrant of commitment (prison term) for up to 40 days if you fail to provide good reason why you stopped making payments as ordered by the Court [see Enforcement of Judgments Act 1991 s 5(7)]. You are considered to be in contempt of court. The debt remains and you will still have to comply with the court orders. A Warrant of Commitment is issued by the Court, and not by the judgment Creditor.

I have been given a Summons to Witness for a Company Debt - what should I do?

A company officer (director or secretary are examples of company officers) can be summonsed to appear in Court to explain how a company can pay a judgment debt. You should bring information about the company's financial situation, including bank accounts, tax returns or financial statements to provide to the Court.

If your company has ceased trading or has no money to pay the debt, you (as the director or other officer) cannot be made responsible for payment of the debt. It is only the person or company against whom the judgment has been given who is liable for the debt. If your company is struggling to pay its debts, you need to get professional accounting advice quickly because of your duty as a director to avoid trading whilst insolvent.

Getting help

National Debt Helpline (formerly the Financial Counselling Hotline) 1800 007 007

The free helpline is open from 9:30am to 4pm, Monday to Friday. When you call this number you will be automatically transferred to the phone service in your state. There is also an online search facility to locate a financial counsellor at the South Australian Financial Counsellors Association.

Australian Financial Security Authority (AFSA) (formerly ITSA)

Level 9, 80 King William Street ADELAIDE SA 5000

GPO Box 2604 ADELAIDE SA 5001

Telephone: 8112 4300, 1800 882 078

Gambling Counselling Services

Gambling Help Services (SA)

Telephone: 8223 4566

Gambling Help Line

Telephone: 1800 858 858

Financial Counselling Services

Financial counsellors can help you organise your finances, design a personalbudget, negotiate with your creditors, explain debt recovery procedures,bankruptcy and other alternatives.

Their services are free.

Aboriginal Legal Rights Movement

321-325 King William Street ADELAIDE SA 5000

Telephone: (08) 8113 3777

Anglicare SA

Anglicare SA, Christies Beach

111 Beach Road CHRISTIES BEACH SA 5165

Telephone: 8186 8900


The Old Rectory, Salisbury

4-6 Church Street SALISBURY SA 5108

Telephone: (08) 8409 3670

Northern Community Legal Centre

26 John Street SALISBURY SA 5108

Telephone: (08) 8281 6911

Salvation Army - Social Services

39 Florence Street FULLARTON SA 5063

Telephone: (08) 8408 6900


Tod Street GAWLER SA 5118

Telephone: (08) 8522 4522


10 Pitt Street ADELAIDE SA 5000

Telephone: (08) 8202 5111

UnitingCare Wesley Bowden Inc

77 Gibson Street BOWDEN 5007

Telephone: (08) 8245 7100


If you are a client of the Department for Child Protection, they may be able to provide you with financial counselling services at one of their offices:


Money Smart - Commonwealth Government website offering practical information about a range of issues

Doing it Tough - information from lenders about how to deal with financial harship

    For Debtors  :  Last Revised: Thu Jul 28th 2016
    The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.