Complete guide

The debt collection journey
in Australia

From the moment you issue a letter of demand to the day you get paid — every stage explained, with the stats that matter and where SydneyCollect fits in.

5 min read
B2B debt, Australia-wide
Updated April 2026
1
Day 1 SydneyCollect handles this

Letter of Demand

The starting gun. A formal letter of demand puts your debtor on notice — it states the amount owed, the legal basis for the debt, and gives a clear deadline to pay (typically 14 days). It's the first step in any debt recovery process and a legal prerequisite before commencing court proceedings.

~70%
of B2B debts resolve after a formal letter of demand
5 min
to generate and send with SydneyCollect
$29
cost — only $29, no sign-up required
What it must include
Your full name or business name, the debtor's details, total amount owed, the debt's legal basis (invoice, contract, service agreement), a clear payment deadline, and your preferred payment method.
Why it works
A formal letter signals you're serious — and that legal proceedings are next. Most debtors pay at this stage to avoid court costs, credit damage, and the disruption of litigation.
Typical outcome
Payment in full, a payment plan offer, a written dispute, or silence. If silence, wait 14 days then escalate.
Limitation periods
Most B2B debts in Australia must be claimed within 6 years of the debt arising. Acting early preserves your legal rights.
SydneyCollect's role — Step 1

We generate a lawyer-approved letter of demand and email it directly to your debtor with a professional cover email — on the same day. Only $29. No account needed. You receive a tracking link showing when the debtor opens the letter, and automated follow-ups go out at Day 7 and Day 14 if there's no response.

If unpaid after 14 days →
2
Day 14+ SydneyCollect connects you

Engage a Solicitor

Because SydneyCollect has already issued a Final Letter of Demand on your behalf, engaging a solicitor at this stage is significantly easier — and more affordable — than starting cold. The groundwork is done: the debtor has been formally put on notice, the debt is documented, and the paper trail is in order. With your consent, we connect you with an affordable, experienced debt recovery solicitor who reviews the matter and provides a fixed-fee quote for initiating court proceedings.

~40%
of remaining debtors settle upon receiving a solicitor's letter
Lower cost
preparation already done — solicitor starts from a stronger position
Fixed quote
solicitor provides a quote before you commit to any proceedings
Why it's easier after our Final LOD
The solicitor receives a complete file — the debt particulars, the final demand letter, and the debtor's response history — reducing the time and cost needed to prepare for proceedings.
What the solicitor provides
A review of your matter, an assessment of recovery prospects, and a fixed-fee quote for commencing proceedings through the appropriate court.
Cost recovery
In most Australian courts, if you succeed, you can seek an order that the debtor pays your legal costs — though recovery is not always complete.
Which court?
NSW: Local Court (<$100k), District Court ($100k–$750k), Supreme Court ($750k+). Other states have equivalent thresholds.
SydneyCollect's role — Step 2

With your consent, we refer your matter to a vetted solicitor from our partner network. From this point, you deal with the solicitor directly — they handle all legal strategy, filings, and correspondence. Our job is to make that handover as smooth as possible.

Proceeding to court →
3
Court filing

Statement of Claim

A Statement of Claim (SoC) is the formal court document that initiates legal proceedings. Your solicitor prepares and files it in the appropriate court, drawing on the debt particulars already documented in SydneyCollect's Final Letter of Demand. The debtor is formally served and then has 28 days to respond. This is the official start of litigation — a significant escalation that most debtors take seriously.

28 days
the debtor has to file a defence after being served
$100–$1,500+
court filing fees (scale with claim amount)
~55%
of debtors either pay or settle after a SoC is filed
What the SoC contains
Particulars of the claim (who, what, when, how much), the legal basis (debt, breach of contract, quantum meruit), and the amount sought including interest and costs.
Service of process
The SoC must be served on the debtor personally or at their registered business address. Service is usually by a process server or Australia Post registered mail.
Interest accrual
Statutory interest in NSW accrues at the court rate (currently ~8% p.a.) from the date the debt was due until judgment — and continues to accrue post-judgment.
What happens next
The debtor either pays, ignores the SoC (→ default judgment), files a defence (→ hearing or settlement), or requests an extension of time to respond.
Debtor has 28 days to respond →
4
Decision point
The debtor's response determines what happens next
Path A — No response filed
Step 4A

Default Judgment

If the debtor fails to file a defence within 28 days of being served, you can apply for default judgment. If the application is in order, the court may grant default judgment in your favour without any hearing — you don't need to prove your case again.

~35%
of Statements of Claim result in default judgment
1–5 days
typical turnaround once the application is lodged with the court

Next step: Once default judgment is obtained, you can move directly to enforcement — garnishing wages, seizing assets, or registering the debt with a credit agency. Proceed to Step 5 →

Path B — Defence filed
Step 4B

Court Hearing or Settlement

If the debtor files a defence, the matter is listed for a court hearing. But most cases settle before reaching that point — either through direct negotiation or a court-ordered mediation session.

~80%
of defended claims settle before a final hearing
3–12 mo
typical timeline to a hearing if it doesn't settle

Settlement: Parties can agree on a lump sum, payment plan, or reduced amount at any time. A solicitor can negotiate on your behalf. Hearing: A judge hears both sides and delivers a judgment. Either way, proceed to Step 5 →

Judgment obtained — now enforce it →
5
Step 5 — Enforcement

Judgment Enforced

Once you hold a judgment — whether by default or after a hearing — the court gives you powerful tools to actually collect the money. The debtor can no longer simply ignore you; the law compels them to pay.

Garnishee Order

Redirect funds directly from the debtor's bank account or employer wages to pay the judgment debt — without the debtor's cooperation.

Writ of Execution

A sheriff seizes and sells the debtor's property — equipment, vehicles, stock — to satisfy the debt.

Examination Hearing

The debtor is summoned to court to disclose their assets and finances under oath — helping you identify what to target.

Credit Reporting

Judgments are reported to credit agencies, damaging the debtor's ability to borrow and trade — creating strong incentive to pay.

Statutory Demand

For company debtors — a formal demand that, if unpaid in 21 days, allows you to apply to wind up the company.

Bankruptcy Petition

For debts over $10,000 against an individual debtor who can't or won't pay — a powerful last resort.

Most debts never reach this stage.

~70% of debts resolve after a single letter of demand. Start there — it takes 5 minutes.

Send a letter

General information only. This page provides a generic summary of the Australian debt recovery process and is not legal advice. Every matter is different — the appropriate steps, costs, and likely outcomes depend on the specific facts of your case. From Step 2 onwards, you deal directly with your solicitor, who will advise you on the best course of action for your circumstances. SydneyCollect is not a law firm and does not provide legal advice.

By the numbers

The Australian debt recovery landscape

~70%
of B2B debts resolve after a letter of demand — without legal proceedings
21 days
typical time from first letter to payment when the debtor cooperates
6 years
limitation period for most B2B contract debts in NSW — act before it expires
$29
cost to start — SydneyCollect's letter of demand service is only $29 per letter

Start at Step 1 — for only $29

Most debts are resolved right here. Send a lawyer-approved letter of demand today and let the process work for you.

Send a letter of demand